This end-to-end guide explains what a “collection hearing” usually means, what immediately happens after you receive a summons, the defenses and documents you need, how small claims differ from regular civil suits, what outcomes to expect (including settlement), and how judgments are enforced—all in the Philippine context.

1) First principles (read this before anything else)

Debt is a civil matter. Non-payment of a bank loan is not a crime. You cannot be jailed for debt (separate crimes like B.P. 22 or estafa are different cases with different elements).
Always read the summons. It tells you which court, the case type (often Small Claims or Civil—Collection of Sum), the hearing date, and what to file (answers, evidence, forms).
Missing the hearing risks default. If you don’t appear or file on time, the court can declare you in default and decide without your side being heard.

2) What kind of “hearing” is it?

A) Small Claims Case (Summary procedure)

Used for money claims up to the current small-claims threshold (exclusive of interest, damages, and costs).
No lawyers may appear as counsel (unless the party is a lawyer appearing for themself). You may personally appear or be represented by someone with a Special Power of Attorney (SPA); corporations appear through authorized officers.
One-day hearing mindset: The judge will try to settle the case first. If no settlement, the court receives documentary evidence and sworn statements and may decide on the spot or shortly after.
Judgment is final and unappealable (only extraordinary remedies for grave abuse of discretion).

B) Regular Civil Case—Collection of Sum of Money

The bank sues in the Regional Trial Court (RTC) (or MeTC/MTC depending on amount).
Flow: Answer → Pre-trial → possible Court-Annexed Mediation (CAM)/Judicial Dispute Resolution (JDR) → Trial by judicial affidavits → Decision → Appeal (if any).

C) Barangay (Katarungang Pambarangay) conciliation

Some disputes must pass through the Barangay if the parties are natural persons residing in the same city/municipality.
Banks/Corporations and parties living in different cities/municipalities are typically outside mandatory barangay conciliation. If you’re invited by the barangay, it’s still a chance to settle or document payment terms.

3) What to do the moment you receive the summons

Calendar the dates. Note the hearing date and any filing deadlines (e.g., Answer within the reglementary period for regular cases; Response/forms for small claims).
Assemble your file (see §8): the loan contract/application, promissory note, terms & conditions, statements of account, receipts, demand letters, emails/texts, and any restructuring offers.
Check the plaintiff’s identity. Is the plaintiff the bank, a special purpose vehicle (SPV/FIST), or a collection agency? If it’s an assignee, they must show a valid assignment and authority to sue.
Compute your figures. Separate principal, contractual interest, penalties, and other charges. Be ready to dispute unconscionable rates or junk fees.
Decide your path: (a) defend fully, (b) settle on structured terms, or (c) admit part and contest the excess.

4) Filing your side

A) In Small Claims

Complete the Response form and attach sworn statements and supporting documents.
Bring originals for comparison. Prepare a short computation sheet showing what you admit (if any) and what you dispute.
If you’ll send a representative, execute an SPA authorizing them to appear, present evidence, and settle.

B) In a Regular Civil Case

File a verified Answer within the period stated in the summons.
Include affirmative defenses (e.g., wrong amount, lack of plaintiff’s standing, improper venue, prescription) and counterclaims (e.g., for abusive collection damages if properly pleaded).
After pre-trial, the court may send the case to CAM/JDR where you can negotiate restructuring or compromise judgment.

5) Common bank proofs—and how to scrutinize them

Signed loan contract / credit card application and general terms. Verify signatures, dates, and version of T&Cs.
Statement of Account (SOA) and running ledger. Check periods covered, interest/panelty rates, posting of payments, and charge origins.
Demand letters. Note dates and addresses; an undelivered demand doesn’t bar suit but may affect interest computations.
Assignment papers (if a third party sues). Require deed of assignment, board approvals, and notice to you per the contract/statute.

What to challenge:

Unconscionable interest/penalties (courts can reduce these).
Unexplained fees (collection, legal, “processing”) not grounded in the contract or law.
Arbitrary computations (ask for itemized principal vs. charges).
Standing of a collector/assignee (must prove chain of title/authority).

6) Your defenses (pick what fits your facts)

Payment/Partial Payment: attach receipts, bank proofs, or screenshots; reconcile to the SOA.
Wrong Amount: dispute interest math, penalty stacking, or double counting.
Lack of Standing: plaintiff isn’t the creditor or assignee fails proof of assignment/authority.
No Valid Contract: unsigned/illegible contract terms, or T&Cs not proved.
Prescription: actions on written contracts generally have long prescriptive periods, but some ancillary claims may prescribe earlier—raise if applicable.
Violation of due-process in collection (harassment, shaming): may not erase the debt but can support damages/counterclaims.
Illegal or unconscionable stipulations: seek judicial reduction of excessive interest/penalties and disallowance of non-contracted fees.
Set-off: if the bank holds your money (e.g., deposits) and the contract allows set-off, assert legal compensation issues if they already offset or should have offset.

7) Settlement options that actually work

Restructuring: lower interest, longer term, fixed monthly payment, and waiver/reduction of penalties.
Lump-sum compromise: discounted payoff; insist on a written computation and official receipts.
Consent/Compromise Judgment: records the deal; if you miss payments, the bank can execute without a new suit.
Stipulated dismissal: case is dropped after full payment; bank issues Release and Quitclaim and updates credit bureau entries.

Negotiation tips:

Offer what you can actually sustain.
Ask to apply payments first to principal, then interest, then penalties (unless the contract mandates otherwise; still worth negotiating).
Get everything in writing; don’t pay in cash without OR.

8) Evidence & documents checklist (defendant’s side)

Government ID and summons (with registry receipts/return of service if any).
Loan file: application, approval notice, promissory note, T&Cs, disclosure statement.
Statements & ledgers, emails/SMS with the bank, payment proofs (ORs, bank confirmations).
Demand letters (and your replies).
Assignment papers if a third party sues.
Computation sheet separating principal/interest/penalties/fees.
Any restructuring offers from the bank.
If alleging harassment: screenshots, call logs, affidavits (these support damages/counterclaims).

9) What happens at the hearing

Small Claims

Mediation talk first. Judge encourages settlement.
If no deal, judge receives documents and sworn statements; brief clarificatory questions.
Decision may be issued the same day or soon after; final and executory.

Regular Civil

Pre-trial: mark exhibits, stipulate facts, explore settlement.
Mediation/JDR: try to settle; if not, case proceeds.
Trial by judicial affidavits: witnesses adopt affidavits; limited cross-questions.
Decision → possible appeal timelines.

10) If judgment goes against you

The court issues a Money Judgment for principal + allowed interest/penalties + costs (possibly reduced from what the bank asked).
The creditor can seek execution:
- Garnish bank accounts, receivables, or salaries (subject to legal exemptions).
- Levy on non-exempt personal or real property and sell at auction.
- Examination of judgment debtor (you) to disclose assets.
You can still settle during execution—often at better terms than before, but with fewer options.

11) If you win (in whole or part)

Case may be dismissed (bank failed to prove its case) or the award reduced (unconscionable charges trimmed; math corrected).
Ask for cancellation of adverse credit bureau reporting, and for the bank to issue a Release acknowledging the resolved balance.
If you proved abusive collection, the court may award damages and attorney’s fees (when properly pleaded and proven).

12) Practical scripts & moves

At settlement caucus: “Your Honor, we propose to pay ₱____ monthly for 24 months at ____% p.a., penalties waived, with payment applied first to principal. We request a compromise judgment with a 15-day grace per installment.”
When disputing the amount: *“We admit ₱____ principal but contest interest at __% and penalties at % as unconscionable. We respectfully submit our recomputation (Annex ‘’).”*
Questioning standing of an assignee: “Plaintiff is not the originating bank. We request the deed of assignment, board approvals, and proof of notice to debtor. Without them, plaintiff lacks standing.”

13) Do’s and Don’ts

Appear on time with organized exhibits (tabbed, labeled).
Bring originals for comparison.
Prepare a 1-page brief of your defenses and your settlement bottom line.

Don’t

Ignore the summons.
Sign a blank or one-sided restructuring form; insist on filled-in specifics.
Pay to personal accounts or in cash without OR.
Be intimidated by threats of arrest for civil debt (not a crime).

14) After the case—clean up your records

If settled or paid, secure a Release and Quitclaim and Statement of Account Zeroing.
Ask the creditor to update credit bureau reporting and issue a clearance.
Keep the Decision/Order, receipts, and release documents in a permanent file.

15) Quick, printable checklist

Read summons; calendar deadlines and hearing
Identify case type (Small Claims vs Regular Civil)
Gather contracts, SOAs, receipts, demands
Verify plaintiff’s standing (bank vs assignee)
Prepare Response/Answer + evidence
Draft recomputation and settlement proposal
Attend hearing; push for fair settlement or present defense
If judgment adverse, discuss payment plan during execution
If favorable, secure release and credit update

Final word

A collection hearing is about numbers, documents, and choices—not fear. Show up prepared, separate principal from charges, challenge anything unconscionable or unsupported, and be ready with a realistic settlement you can honor. Whether you win, lose, or compromise, the goal is a clear, enforceable resolution that protects your finances and future.