Managing debt during crisis

The Philippines, one of the high-risk countries affected by the corona virus outbreak has left many Filipinos unsure about their work and income, and how will they get money while on locked down. This pandemic is an unprecedented event. Unfortunately, it’s both a public health crisis and an economic disaster. 

The economy in the Philippines could contract for the first time in more than two decades this year due to the fallout from the corona virus pandemic. Among the fastest-growing economies in Asia during the pre-pandemic period, Philippine gross domestic product would likely shrink by 2.0% this year before bouncing back to about 6.5% as policy support measures gain traction, and assuming the COVID 19 outbreak is contained by June of this year.

Locked down for almost 2 months because of the enhanced community quarantine, the government’s response to the continuing COVID 19 scare, millions of Filipino families and individuals will have to make difficult decisions about how to pay bills. During these times, it is best to keep calm, compose yourself, and come up with a plan to make yourself more financially healthy. Determine which payments you’re going to need to prioritize. 

Highest priority: Housing

Housing and related bills should be at the top of the list. This is the most important expense since you need a safe place to live. Either mortgage or rent, you must keep your payments or contact your landlord or mortgage issuer to see if they can find some leeway to postpone your payment.

Medium priority: Utilities 

These include services like water, electricity, internet, cable TV, phone, failing behind on these bills may put you at risk of accruing fees, and could even result in having your utilities shut off. If you’re having trouble paying, reach out to the utility providers.

Lower priority: Everything else

These are other types of debt that can likely be put on the back at the moment or at least can be negotiated. These can be like pawned items, owed money or loan. Ask for payment arrangements if possible. You do need to contact your creditor and let them know COVID 19 has prevented you from being able to fulfill your obligations. As for credit cards, most major banks are allowing borrowers to defer their credit card payments for the time being. 

The government has implemented a 30-day moratorium for loan payments with due dates that fall within the enhanced community quarantine period. Which means Filipinos can skip a one-month payment with no interest and other fees and charges. The moratorium covers all banks, savings and loan associations, credit card issuer, and pawnshops. It also covers financial institutions GSIS, SSS, and Pag-IBIG. It also applies to residential and commercial rent for small and medium enterprises. Utility companies are also included in this moratorium.

Remember that ignoring your bills isn’t a good idea, no matter how bad the situation is or how overwhelmed you may feel. If you can’t cover a bill, be upfront about it. 

Filipinos are very flexible and resourceful people.

The goal is to stay positive, stay on track.  

-Loida Arenga

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