For a new year where recession and gloom seems to be in the cards, it should be appropriate to discuss how you can protect yourself against creditors once they come knocking on your door and you have no money with which to pay them.
First off, there are certain assets which are immune from the hands of your creditors. So even if you have lost everything, there are things that you can keep. Under the Family Code, the family home is exempt from execution, forced sale or attachment.[1] How do you constitute a family home? It is done from the time you occupy a house and lot as a family residence. It continues to be a family home from its constitution and for as long as any of its beneficiaries reside there.[2] Living in at your parent’s house can be a plus here.
The family home subsists for a period of 10 years from the time 1 or both spouses or the unmarried head of the family passes away or for as long as there is a minor beneficiary.[3]
However, not just any home is exempt from the creditor’s claws. The home’s actual value should not exceed P300,000 in urban areas and P200,000 for rural areas.[4] One wonders what kind of home one can buy at those prices and these amounts need to be revised to reflect current realities.
So mansions are not really exempt. Where the actual value exceeds the aforementioned amounts, the debtor can proceed to court for an order for the home to be sold. The debtor can then get the excess but at least, you can get reimbursement to the extent of P300,000 or P200,000.[5]
Also note that the family home is not exempt from all claims. It can be the subject of execution, sale or attachment for taxes, debts incurred prior to the constitution of the family home, debts secured by mortgages on the home, and debts due to laborers, mechanics, architects, builders, materialmen and others who have rendered service or furnished material for the construction of the building.[6]
You can only have one family home, not as many as the number of families you may have in case you have more than one.[7]
Assuming that you are able to keep your home, what happens to the rest of your assets? Under the Rule 39[8] of the Rules of Court, there are certain things that you can keep.
Apart from being able to keep your home, you will not be prevented from earning a living as “Ordinary tools and implements personally used by” you in your “trade, employment, or livelihood” are exempt from execution. You can also keep “Three horses, or three cows, or three carabaos, or other beasts of burden such as the judgment obligor may select necessarily used by him in his ordinary occupation.” One wonders why the number of livestock was pegged at three.
You can keep your “necessary clothing and articles for ordinary personal use” but “excluding jewelry”, even if you feel you can’t live without them. “Household furniture and utensils necessary for housekeeping, and used for that purpose by the judgment obligor and his family, such as the judgment obligor may select, of a value not exceeding one hundred thousand pesos” can be kept as well.
“Provisions for individual or family use sufficient for four months” are allowed. “Professional libraries and equipment of judges, lawyers, physicians, pharmacists, dentists, engineers, surveyors, clergymen, teachers, and other professionals, not exceeding three hundred thousand pesos in value” are not to be claimed by the creditors but kiss that cd collection good-bye.
If you are a fisherman, you can keep “One fishing boat and accessories not exceeding the total value of one hundred thousand pesos xxx.” Whatever salaries, wages, or earnings you have within the four months preceding the levy as are necessary for the support of your family are yours to use. “Lettered gravestones” can be kept which only a heartless creditor would go against. “[M]onies benefits, privileges, or annuities accruing or in any manner growing out of any life insurance” are exempt. Pensions are safe too as the “right to receive legal support, or money or property obtained as such support, or any pension or gratuity from the Government” is expressly carved out in the rules. Last are “properties specially exempt by law.” And no article or species of property as above-mentioned are exempt from execution “issued upon a judgment recovered for its price or upon a judgment of foreclosure of a mortgage thereon.”
You do get to keep the clothes on your back and some other items. But the best weapon is prudence by not borrowing more than what you can pay otherwise it will be the debt of you and most of everything that you own.
No comments:
Post a Comment