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Debt bondage: The scourge of OFWs

Daisy Cl Mandap

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'Some flee, but even in the Philippines, the collectors hound them'

Debt is the scourge of overseas Filipino workers.

Even before they leave the Philippines for work abroad, many are already saddled with debt. In most cases, it’s due to the high placement fee they are made to pay, which smacks in the face of our government’s supposed no-placement fee policy for Filipino domestic workers.

For those who get mired once they start working in Hong Kong, it’s often because of the ease with which they are allowed to borrow sums that are double, even triple, what they earn monthly. All that is asked of them is to produce their passport or contract, and presto!
 
Of late, they need not even give anything in return, except their mobile phone number, their employer’s landline, plus the contact information of their “guarantor” or “reference.” And they’re done.
 
Or so they think. Little do they realize that they are setting themselves up for great trouble once they miss even just a single monthly payment.

Those phone numbers that they freely give become instruments for debt collectors to harass them into paying, or getting them sacked if they refuse.

But before that happens, they get an earful of rude, degrading and downright lewd messages. The calls come even in the dead of night, the only purpose of which is to coerce the debtor into paying.

Once they get looped in, a borrower may find it difficult to get out. For one, the legal interest rate in Hong Kong is a whopping 60% per year. That means, one who borrows a thousand bucks is liable to pay $1,600 (USD$206.45) by year’s end.

Limited options

Given these figures, many of our workers express shock. It’s because all that they are told when they take out the loan is how much they need to pay each month. Once they see that they can pay this, they relax. They start thinking borrowing money is not as bad as they are made to think.

Until they experience real emergency, like a family member dying or getting seriously ill. Already saddled with debt, they take out another, or more, loans. The monthly payment gets so big that they hardly have enough left by month’s end.

When that happens, what do they do?

Some flee, but even in the Philippines, the collectors hound them. It’s because of that clause in the contract that they signed that says the debt is recoverable even in the Philippines. 

Others try to toughen it out. They stay put, but try to convince the lender to give them more space and time to pay up. But in many cases, they still end up being sacked because the nasty calls they ignore get re-directed to their employer’s house.

A few end up losing their minds, or taking the ultimate cop-out: suicide.

Then there are also those like Jonabeth Espanola who end up in jail because the debt burden made them resort to committing crimes.

In Jonabeth’s case, the crime was helping a syndicate lure Filipinas into borrowing money at 10% interest each month. This is a practice known to all of our more incorrigible borrowers. The first monthly interest is deducted automatically, and one needs to pay the full amount plus interest if she wants the loan contract extinguished.

Anomalous deal

But what they don’t realize is the full impact of this highly anomalous deal. Police experts who have calculated the interest rate in such a deal puts it more than 200%, maybe more, depending on the loan amount.

Even by Hong Kong’s standards, this is clearly unconscionable.

Jonabeth was a victim herself. After struggling to pay her own usurious loan, she agreed to act as go-between for other Filipinas looking to borrow money.

The case for which she was charged involved a loan amount of HK$4000 (US$516). The borrower paid the full loan, plus interest of HK$800 (US$103.22), within two months. But trouble erupted when she failed to get back her passport, and complained to authorities.

Jonabeth pleaded guilty to helping facilitate the usurious loan, but still got sent to six months in jail.

In contrast, the couple she accused of shelling out the money for the loans and keeping the borrowers’ passports, went scot-free. The court said Jonabeth lied about her full role in the scam, as she insisted she did not profit from the transactions.

It’s a sad outcome of a case that started when a syndicate found a way to exploit our workers’ propensity to borrow money, at whatever interest, whatever the consequences.

May it serve as a wake-up call to the many who don’t think twice, thrice, or more, before they take out a loan. It shows that the money you borrow now could lead you to bigger trouble, even misery. – Rappler.com

(*US$1 =  HKD$7.75)

This piece was first published in The Sun Hong Kong. Rappler is republishing this with permission. The author is a veteran journalist, having worked for various newspapers and TV stations in the Philippines and in Hong Kong. She is also a lawyer and migrants rights activist.

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