1. What if the debt remains unpaid and uncollected?
BSP CIRCULAR NO. 398
Series of 2003
Credit card receivables shall be classified in accordance with age as follows:
No. of days past due: 181 or more
Classification : Loss
2.What does BSP advises?
BSP CIRCULAR NO. 210
Series of 1999
The amount of loss is difficult to measure and it is not practical or
desirable to defer writing off this basically worthless asset even
though partial recovery may be obtained in the future.
3.What should CC companies do then?
CIRCULAR NO. 463
Series of 2004
Banks... may write-off loans against allowance for probable losses (valuation reserves)as soon as they are satisfied that such.. are worthless
Notice of write-off to the supervising and examining department at least twenty five (25) banking days prior to the intended date of write-off.
4.What happens afterward?
The income tax expense deferred, corresponding to the amount of loan written-off considered deductible for income tax purposes, shall be recognized and reversed in bank’s books.
Pag-hinde makabayad ang may utang,deduct lang ng bangko ito
sa taxes na babayaran nila sa gobyerno.
Paunawa : their words, not mine