The growing indebtedness among Filipino teachers warrants an examination of whether they possess a clear understanding of debt concepts and how they make borrowing decisions. To date, little is known about the debt literacy and debt behavior of teachers. The study aimed to address this gap by using a descriptive-correlational research design and analyzing survey data from 480 public school teachers in Iloilo City. Results have shown that teachers have low debt literacy, averaging 1.66 out of 5 questions. They understood the concepts of simple interest and loan duration, but struggled with more complex topics, including compound interest, credit card repayment, and time value of money. Significant differences in debt literacy emerged across age and income groups. As to debt behavior, teachers tend to avoid expensive borrowing and show openness to seeking financial advice. The correlation analysis further revealed that teachers who are more debt literate are less likely to engage in high-cost borrowing and are more inclined to seek financial advice. These findings contribute to the scant literature on debt literacy and highlight the need to integrate debt management training into teachers’ continuous professional development. Collaborative efforts between the Department of Education, government agencies, and financial institutions should focus on sustainable financial education programs and prioritize support for vulnerable cohorts, such as retiring teachers and those from low-income households. Beyond education, policy support is needed to strengthen consumer protection, boost financial inclusion, and evaluate the adequacy of teachers’ salaries.