The Philippines has seen a sharp rise in debt relief companies, especially since the pandemic, offering services such as debt consolidation, debt settlement, debt management plans, and credit counseling. While some are legitimate and helpful, many are outright scams or operate in legal gray areas that expose consumers to financial loss, damaged credit standing, and even criminal liability.

This article provides a comprehensive, Philippine-specific guide on how to verify the legitimacy of any entity offering debt relief services, based on current laws, regulatory requirements, and actual enforcement practices of the Securities and Exchange Commission (SEC), Bangko Sentral ng Pilipinas (BSP), Department of Trade and Industry (DTI), and other government agencies.

1. Verify SEC Registration and Good Standing (Non-Negotiable First Step)

Every legitimate corporation, partnership, or single proprietorship offering debt relief services must be registered with the Securities and Exchange Commission (SEC).

Steps to verify:

Go to the SEC website (www.sec.gov.ph) → eSPARC → Company Registration and Monitoring Department → Search Registry.
Search by exact company name or SEC registration number.
Check the General Information Sheet (GIS) for current officers, address, and capitalization.
Download the Certificate of Incorporation and latest GIS.

Red flags:

“Registered as non-stock, non-profit” but charging large fees (common scam tactic).
SEC registration number is old or belongs to a different company.
Company is listed as “Suspended” or “Revoked.”

As of 2025, the SEC maintains a public advisory list of entities engaged in unauthorized debt relief, lending, or investment schemes. Always cross-check the name against the SEC Advisory list (https://www.sec.gov.ph/advisories-2025/).

2. Determine the Exact Nature of the Service Being Offered and the Required License

Debt relief services fall into different categories, each with distinct regulatory requirements.

A. Debt Consolidation Loans
If the company will give you a new loan to pay off old debts → it is acting as a lending or financing company.

Requirements:

Must be registered with SEC as a lending company (Republic Act No. 9474) or financing company (R.A. No. 8556).
Must have a Certificate of Authority (CA) to operate as a lending/financing company.
Full list of SEC-authorized lending and financing companies is published monthly on the SEC website.

If the company has no CA, it is operating illegally and charging usurious interest is common.

B. Debt Settlement / Debt Negotiation (Third-Party Negotiation)
The company negotiates with your creditors to reduce principal or interest.

Regulatory status in the Philippines:

There is NO specific license for “debt settlement companies” under Philippine law.
Most legitimate debt settlement is done directly by banks’ own recovery departments or by law firms authorized by the creditor.
Third-party debt settlement companies usually operate without any government license and are considered high-risk by both SEC and BSP.
The SEC has repeatedly warned (SEC Memorandum Circular No. 12, series of 2019 and subsequent advisories) that entities promising to “settle” or “condone” debts for a fee are often running advance-fee scams.

C. Credit Counseling / Debt Management Plans
Legitimate credit counseling is usually offered free or at very low cost by:

Credit Card Association of the Philippines (CCAP) member banks
Bank-sponsored restructuring programs
Non-government organizations registered with DSWD or SEC as non-stock, non-profit

Any entity charging thousands of pesos monthly for “counseling” while promising miraculous debt reduction is almost certainly illegitimate.

3. Check for BSP Supervision or Accreditation (If Applicable)

If the debt relief program is offered by a bank or its subsidiary, it falls under BSP supervision.
BSP-supervised institutions are required to follow Circular No. 1133 (2021) on debt restructuring and Circular No. 1160 (2023) on fair debt collection practices.
You can verify BSP registration at www.bsp.gov.ph → Regulated Entities.

Non-bank debt relief companies are NOT supervised by BSP, which is why most scams operate outside the banking system.

4. Common Red Flags Recognized by Philippine Regulators (2025)

The SEC, BSP, and DTI consistently list these as danger signs:

Upfront fees before any service is rendered (especially ₱10,000–₱50,000 “processing” or “legal retainer” fees). This is the hallmark of advance-fee scams and is repeatedly flagged in SEC advisories.
Guarantee of specific debt reduction percentage (“We can cut your debt by 50–70%”).
Advice to stop paying your creditors or stop communicating with your bank.
Claim of being “accredited by the government” or “partner of BSP/SEC.”
Use of fake government logos or fake BSP/SEC accreditation certificates.
Requirement to sign a Special Power of Attorney (SPA) giving them full control over your bank accounts or assets.
Promise of “debt condonation” or “one-time settlement” under a non-existent government program.
Pressure to decide immediately (“offer valid only today”).

5. Verify Complaints and Enforcement History

Sources to check:

SEC Enforcement and Investor Protection Department (EIPD) complaints database (https://www.sec.gov.ph/complaints/)
BSP Consumer Assistance Mechanism (https://www.bsp.gov.ph/Pages/ConsumerAssistance.aspx)
DTI Consumer Protection Division (complaints can be filed online)
National Privacy Commission (if they are mishandling your personal/financial data)

If the company already has multiple complaints for non-delivery of service or misrepresentation, avoid it completely.

6. Legitimate Alternatives Recognized Under Philippine Law

Instead of dealing with third-party debt relief companies, Filipinos have these lawful, regulator-endorsed options:

Direct negotiation with your bank/creditor – Banks are required under BSP Circulars 1098, 1133, and 1160 to offer restructuring, condonation of penalties, or extended payment terms, especially for COVID-19-affected borrowers (Bayanihan 2 and subsequent circulars still honored in practice).
Court-supervised rehabilitation
- For individuals with overwhelming debt: Petition for Suspension of Payments and Rehabilitation under Rules of Court or, if qualified, Voluntary Insolvency under Act No. 1956 (old Insolvency Law still in force as of 2025).
- For juridical entities: Financial Rehabilitation and Insolvency Act (FRIA, R.A. No. 10142).
DTI-accredited mediation for consumer credit disputes.
Free financial counseling from NGOs such as the Financial Literacy Advocacy and Resource Center (FLARC) or church-based organizations, or university-based legal aid clinics.

7. Criminal and Civil Liabilities of Illegitimate Debt Relief Companies

Operating an unauthorized debt relief scheme may constitute:

Syndicated Estafa (Revised Penal Code Art. 315(2)(a) in relation to P.D. 1689) – punishable by life imprisonment if amount exceeds ₱22 million or involves 5 or more persons.
Violation of the Lending Company Regulation Act (R.A. 9474) – fine of ₱50,000–₱2,000,000 and/or imprisonment.
Violation of the Securities Regulation Code (unauthorized investment-taking).
Violation of the Financial Products and Services Consumer Protection Act (R.A. 11765, 2022) – administrative fines up to ₱5 million per violation.

Victims can file criminal complaints with the NBI Cybercrime Division or PNP ACG, and civil cases for damages and refund.

Checklist Before Signing Anything

Is the company SEC-registered and in good standing?
Does it have a Certificate of Authority as a lending/financing company (if offering loans)?
Is it charging upfront fees before rendering actual service?
Does it guarantee debt reduction or stop-payment advice?
Is it listed in any SEC/BSP/DTI advisory as fraudulent?
Are its officers/lawyers verifiable with the Integrated Bar of the Philippines (if it claims to be a law office)?

If the answer to any of questions 3–6 is “yes, walk away.

Debt relief in the Philippines is best handled directly with creditors or through court-supervised processes. Third-party debt relief companies operate in a regulatory vacuum and have an extremely high incidence of fraud. When in doubt, consult a lawyer or file a query with the SEC Consumer Assistance Division before paying even a single peso.