1) The two problems (and why they’re different)

Philippine law treats (a) the cost of the debt and (b) the manner of collection as separate issues:

Excessive interest / penalties / hidden charges This is about whether the lender’s imposed costs are enforceable, reducible, or recoverable under law.
Debt harassment / abusive collection This is about whether the lender/collector’s tactics violate civil rights, criminal laws, data privacy rules, or regulatory standards—even if the debt is valid.

A borrower can challenge one or both.

2) First principles: you cannot be jailed for mere debt

The Constitution provides: “No person shall be imprisoned for debt…” (except when a separate crime is committed). This matters because many abusive collectors rely on fear.

What this means in practice

Non-payment of a loan is not a crime by itself.
But you can face criminal cases if the facts fit a criminal statute (examples: bouncing checks (BP 22), certain forms of estafa, fraud, etc.).
Collectors who threaten jail just for non-payment are usually bluffing or misrepresenting the law—and that misrepresentation can itself support complaints.

3) The legal framework on interest in the Philippines

3.1 Usury ceilings vs. “unconscionable interest”

Historically, the Usury Law (Act No. 2655) imposed interest ceilings. Those ceilings were later effectively lifted (commonly associated with Central Bank/Monetary Board issuances), so the Philippines generally has no fixed statutory interest cap across the board.

But that does not mean “anything goes.” Courts may still strike down or reduce interest that is:

unconscionable, iniquitous, or shocking to the conscience
contrary to morals, good customs, public order, or public policy (Civil Code principle on freedom of contract subject to law)

3.2 “No interest unless in writing” (critical rule)

Under the Civil Code: No interest is due unless it has been expressly stipulated in writing. This is one of the strongest defenses against “surprise” interest.

Practical takeaways:

If there is no written interest stipulation, the lender generally cannot collect “interest” as interest (though a court could still award legal interest in some situations as damages depending on the case).
If the document is ambiguous, unclear, or the borrower never received the true terms, that can support defenses like lack of consent, fraud, void/voidable stipulations, or reformation issues—depending on facts.

3.3 Penalties, liquidated damages, and default charges can be reduced

Even if a penalty is written, the Civil Code allows equitable reduction of penalties when:

there has been partial or irregular performance, or
the penalty is iniquitous or unconscionable

This matters because many lenders load the contract with:

“penalty interest” (on top of regular interest)
compounding default rates
fixed “late fees” that balloon quickly
attorney’s fees in extreme percentages

A court can enforce the principal while reducing these add-ons.

3.4 Interest on interest (anatocism) is restricted

As a general rule, unpaid interest does not itself earn interest, unless:

judicially demanded (once you’re sued and interest is due, it may earn legal interest), and/or
the parties validly agree to capitalize unpaid interest under the Civil Code rules

So “automatic daily compounding forever” is legally vulnerable, especially when the documentation and disclosure are weak.

3.5 The “legal interest” rate (when there is no valid stipulated rate)

When interest is awarded by law or jurisprudence (for loans/forbearance or judgments), Philippine courts commonly apply legal interest (widely treated as 6% per annum in modern cases). Exact application depends on:

whether the obligation is a loan/forbearance vs. damages
the period (pre-judgment vs. post-judgment)
whether there is a valid stipulated interest rate

4) Remedies against excessive interest (civil, defensive, and recovery options)

4.1 If you are being demanded but not yet sued

A. Demand a full written statement of account Ask for:

principal
interest basis and rate
penalties and their legal basis (contract clause)
dates of accrual
all fees (processing, service, collection, attorney’s fees)
proof of your payments applied

This forces transparency and helps you spot illegal/unconscionable items.

B. Put your dispute in writing A written dispute is useful later to show:

good faith
that you challenged abusive charges early
that continued harassment was willful

C. Offer payment of undisputed principal (when appropriate) Sometimes a borrower wants to stop escalation while disputing excess charges. Depending on goals, a borrower may:

tender payment of principal (and reasonable interest)
reserve rights to contest the rest How you do this matters; careful wording and documentation are important.

4.2 If you are sued for collection

Common procedural posture: the lender files a civil case for sum of money or foreclosure/collection.

Key defenses and tools

Challenge interest and penalties as unconscionable; ask the court to reduce or nullify them.
Invoke “no interest unless expressly stipulated in writing” when applicable.
Invoke equitable reduction of penalty when penalties are excessive.
Raise improper computation, lack of basis, double-charging, hidden fees, improper compounding.
Consider counterclaims for damages if collection was abusive (see Section 6).

Evidence that matters

the actual contract/s
proof of disclosures/receipts
ledger statements
screenshots/messages showing shifting terms
payment history and how payments were applied (principal-first vs. interest-first disputes)

4.3 If you already paid excessive interest/penalties

Depending on facts, a borrower may pursue:

recovery of overpayments (unjust enrichment / payments based on void or iniquitous stipulations)
set-off or crediting overpayments against principal
damages under civil law principles if abusive conduct accompanied the overcharge

Outcomes depend heavily on documentation and whether the court treats the stipulation as void or merely reducible.

5) Regulatory remedies (especially for online lending/financing companies)

5.1 SEC jurisdiction over lending and financing companies

In general:

Lending companies are regulated under the Lending Company Regulation Act (RA 9474).
Financing companies are regulated under the Financing Company Act (RA 8556). They are typically under SEC oversight for licensing/authority to operate.

Why this matters If the lender is a lending/financing company (including many online lending platforms), you can pursue:

administrative complaints for unfair collection practices
possible suspension/revocation of authority to operate
sanctions against third-party collectors acting for them

5.2 SEC rules on unfair debt collection (practical protections)

SEC issuances have specifically targeted abusive collection practices often seen in online lending, such as:

threats of violence or criminal prosecution without basis
obscene or humiliating language
contacting your friends/employer/contacts to shame you
public posting of your debt, photos, IDs, or personal information
harassment at unreasonable hours or repetitive intimidation
misrepresentation as “police,” “law enforcement,” or “court personnel”

These prohibitions create a strong paper trail for administrative action when you document the behavior.

5.3 BSP consumer protection (for banks and BSP-supervised institutions)

If your lender is a bank or a BSP-supervised financial institution, complaints are commonly routed through the institution’s internal complaint channels and may be escalated to the BSP’s consumer mechanisms. This can be effective for:

collection misconduct
incorrect charges
disclosure failures

6) Remedies against debt harassment (civil + criminal + data privacy)

Debt harassment is actionable even when the debt is real. The law draws a line between collection and abuse.

6.1 Civil remedies: damages and injunction

Philippine civil law recognizes liability for abusive conduct under the Civil Code’s principles on:

abuse of rights
acts contrary to morals, good customs, or public policy
willful injury or negligence causing damage

Possible civil claims

moral damages (for serious anxiety, humiliation, distress)
exemplary damages (to deter oppressive conduct, in proper cases)
attorney’s fees (under specific grounds)
injunction / TRO to stop ongoing harassment (especially where threats/public shaming continue)

In practice, civil claims are strongest when backed by:

screenshots of threats/insults
recordings (but beware: secret recording of private conversations can raise issues under the Anti-Wiretapping law)
witness affidavits (family/co-workers contacted)
evidence of public posts and shares
medical or counseling records (if harassment caused documented harm)

6.2 Criminal law: threats, coercion, libel, and related offenses

Depending on what was done, collectors may be liable under the Revised Penal Code for:

Grave threats / light threats (threats of harm, disgrace, or crime)
Grave coercion / light coercion (forcing you to do something through intimidation)
Trespass to dwelling (if they enter or refuse to leave)
Oral defamation (slander) or libel (false imputations, public shaming statements)
Harassment tactics sometimes charged under light coercions (often discussed in practice as “unjust vexation” type conduct)

If the harassment is online (posts, mass messages, chat blasts), Cybercrime Prevention Act (RA 10175) can come into play (notably for cyber libel, and procedural tools for digital evidence).

6.3 Data Privacy Act (RA 10173): a major weapon against “contact-blasting” and doxxing

Many abusive collection campaigns involve:

accessing your phone contacts
messaging your friends/family/co-workers
posting your name, debt amount, photos, IDs, or personal data
continuing to process/share your data beyond what’s necessary

Under the Data Privacy Act, personal data processing must generally satisfy principles like:

transparency
legitimate purpose
proportionality

Even when an app obtained “consent,” that does not automatically legitimize:

excessive access (contacts unrelated to underwriting/collection necessity)
public shaming
disclosure to third parties not necessary to the transaction
threats and humiliation using your personal data

Remedies

complaint to the National Privacy Commission (NPC)
potential administrative sanctions and, for serious violations, criminal liability under the Act (penalties depend on the specific violation proven)

Evidence to preserve

app permission screens
screenshots of messages sent to third parties
copies of posts containing personal data
URLs, timestamps, usernames
witness statements from contacted persons

6.4 Anti-Wiretapping caution (RA 4200)

Secretly recording a private conversation can be legally risky. If you plan to record calls, understand that the Anti-Wiretapping law can apply. Safer evidence often includes:

written messages (SMS, chat)
screenshots
call logs
voicemails (context-dependent)
witness accounts
screen recordings of public posts

7) Special topics that frequently arise

7.1 “They said they will send the police / barangay / sheriff”

A private debt collector has no police power.
Barangay processes may apply for conciliation in some civil disputes, but the barangay does not “arrest you” for debt.
Sheriffs implement court writs; they don’t collect consumer debts based on threats or texts. If there is no court case and no writ, “sheriff” threats are usually intimidation.

7.2 “They’re threatening to file BP 22 (bouncing checks)”

BP 22 applies when a person issues a check that bounces and the legal requisites are met (including notice of dishonor and failure to pay within the statutory period). If you did not issue a check, BP 22 is irrelevant. If you did, defenses can involve:

lack of proper notice
payment within required period
absence of essential elements

Collectors sometimes misuse BP 22 threats to pressure payment; evaluate whether the factual elements truly exist.

7.3 “They posted my photo/ID and called me a scammer”

Possible liabilities for the collector/lender (depending on facts):

Data Privacy Act (unauthorized disclosure/processing)
libel/cyber libel if defamatory imputations are made
civil damages for humiliation and distress
SEC administrative violations (if lender/collector is covered)

7.4 “They’re calling my employer / my references”

This can be unlawful or sanctionable when it becomes:

harassment or intimidation
disclosure of your debt to shame you
processing/disclosure of personal data without proper basis
a prohibited debt collection practice under SEC rules (for covered entities)

7.5 “The contract says 20% per month / daily interest / huge penalties”

Courts evaluate unconscionability case-by-case, but very high monthly/daily rates and stacked penalties are classic candidates for:

reduction of interest
reduction of penalty charges
invalidation of unclear/abusive stipulations
re-computation of obligations based on equity and law

8) Practical step-by-step playbook (Philippine setting)

Step 1: Collect and preserve evidence

Create a folder (cloud + offline) with:

loan contract, schedules, promissory note, disclosures
receipts and proof of payments
statement of account computations
screenshots of threats/insults/shaming
call logs (dates/times/frequency)
screenshots from friends/co-workers who were contacted
links and screenshots of public posts (capture timestamps)

Step 2: Verify who you’re dealing with

Identify:

lender’s exact legal name
whether the collector is third-party
whether the lender is a bank, lending company, financing company, cooperative, or informal lender

This affects where complaints go (SEC, BSP, NPC, local law enforcement, etc.).

Step 3: Demand a written accounting and dispute abusive charges

Send a written request for:

computation details and basis
removal/reduction of charges you dispute (unwritten interest, unconscionable penalties, compounding not agreed)

Step 4: Put collectors on notice to stop harassment and unlawful disclosures

A written notice can include:

demand to stop contacting third parties
demand to stop threats, defamatory statements, and shaming
withdrawal of consent (where applicable) to unnecessary processing/disclosure
demand for deletion or restriction of personal data not necessary for legitimate collection

Step 5: File the right complaints (often multiple tracks)

Depending on facts:

SEC (for lending/financing companies and unfair debt collection)
NPC (for contact-blasting, doxxing, disclosure of your personal data)
PNP Anti-Cybercrime / NBI Cybercrime (for online threats, cyber libel, persistent harassment, identity-related abuses)
Prosecutor’s Office (for criminal complaints under the Revised Penal Code and applicable special laws)
Civil case (damages / injunction), or counterclaims if you’re sued

Step 6: If sued, respond properly and raise defenses early

If you receive summons:

observe deadlines
raise unconscionable interest/penalties as defenses
attach proof and request re-computation
consider counterclaims for harassment/data privacy violations

9) Common misconceptions (quick corrections)

“There’s no interest cap, so I’m helpless.” Not true. Courts can reduce unconscionable interest and penalties; unwritten interest is generally not demandable as interest.
“They can arrest me for not paying.” Not for mere non-payment. Arrest requires a criminal basis and due process.
“If I clicked ‘Allow Contacts,’ they can message everyone.” Data privacy rights don’t disappear; processing must still be legitimate, proportionate, and lawful.
“Harassment is just ‘part of collection.’” Threats, shaming, doxxing, and coercion can trigger civil, criminal, regulatory, and data privacy liability.

10) Minimal template language (adapt as needed)

A. Request for accounting + dispute of charges (core points)

Identify the loan/account.
Request a complete statement of account with itemized principal, interest, penalties, and fees with contractual/legal basis.
State that you dispute excessive/unconscionable charges and any interest not expressly stipulated in writing.
Demand that collection communications remain professional and directed only to you, not third parties.

B. Cease-and-desist on harassment + data privacy

Demand cessation of threats, shaming, defamatory statements, and third-party contacts.
Demand takedown of any posts containing your personal data.
Invoke Data Privacy Act principles (limit processing to what’s necessary; stop disclosure).
Notify that documented violations will be reported to SEC/NPC and law enforcement/prosecutors.

11) Bottom line

In the Philippines, borrowers faced with excessive interest and abusive debt collection have layered remedies:

Civil law can nullify or reduce abusive interest/penalties and award damages for harassment.
Criminal law can address threats, coercion, defamation, trespass, and related acts.
Data privacy law is a powerful remedy against contact-blasting, doxxing, and public shaming.
Regulators (SEC/BSP) can sanction covered lenders and collection practices, especially in the online lending space.