MANILA - Those who are buried deep in credit card debts may soon be able to ask their creditors for a little help.

Banks will start testing a new debt restructuring mechanism for credit card holders in April, and if it goes well, the new system may be made available to the public by May.

Under the new system, those in debt will be given a longer time to pay their debts, at lower interests.

"Well, basically it's going to offer more liberal terms, longer term, up to ten years na 'yung structuring and very low interest," Alex Ilagan, executive director of the Credit Card Association of the Philippines (CCAP), told ANC.

Credit card holders can avail of the debt restructuring at one percent monthly interest for a maximum loan period of 10 years.

One can also avail of the restructuring as long as his or her monthly income can accommodate the monthly payment terms. In case the income is not enough, a debtor can ask a relative or a friend to act as co-maker.

"It will really allow you to pay off, and hopefully, be rehabilitated. 'Yun kasi ang target ng BSP, they really want to be able to rehabilitate these cardholders so they can become productive again and start borrowing," Ilagan said.

The new debt restructuring will allow those who are about to fall into default to ask their bank for help, which is significant because most banks would not help their debtors if they are still able to pay their monthly minimum dues.

"Ngayon medyo nag-oopen up na, pumapayag na sila na sige, kahit di ka pa past due basta't malaki talaga 'yung utang mo at makita natin na talagang mahihirapan ka then we will structure it," Ilagan said.

How does one avail of this debt restructuring? Here are the steps.

First, a debtor should contact his or her creditors to inform them of your financial situation.

Next, the bank with the biggest exposure to the debtor will be the lead bank which will negotiate directly to the debtor.

Third, the debtor would present financial documents to prove ability to pay the restructured terms.

The lead bank will also be the one to coordinate with other creditors to come up with an agreed set of terms and interest.

Finally, the debtor will issue a post-dated check to the lead bank, which will then distribute the payment to all other creditors.

Debt counseling

According to Ilagan, those who will apply for debt restructuring will have to undergo debt counseling, especially if their debt is due to their lifestyle.

"Actually, there are some rules din ano, na pagka lifestyle issue, then you might be disallowed to participate. Saka may ano ah, may debt counseling session muna. You have to change your lifestyle saka you have to have discipline so you'll go through a debt counseling session, and it will be mandatory para maliwanag sa'yo anong responsibility niyo," he said.

If the debt is due to life events or emergencies, then banks would allow one to avail of debt restructuring.