Personal finance: Without support of creditor, debtor's hands are tied… literally

Am I harsh in saying that most of the time collectively where debtors have multiple debts, that creditors hold the life of a debtor in their hand?

Frankly, I don’t think so and here’s why where this awareness is long overdue and must be said as it really is:

1.     When an individual or company who is heavily indepted to multiple creditors requests assistance and consideration for a reduced affordable EMI justifying their request then the focus is not directed at the latter, but at:

a.     How come they are so heavily indebted?
b.     Where is the money?
c.     Why can’t they afford it?
d.     Why are they delinquent?
e.     Why don’t they simply make their overdue payments?

Why...why...why....

The solution is not to cry over spilt milk as the money is gone, regardless. The debtor is now facing you the creditor for an amicable solution, because many of them are sincere and want to repay their debt.

The debtor still has a valid residence/employment/self-employment residence visa, a valid passport and all other required documentation is available for review for approval.

The debtor has realised they are either currently facing a debt-crisis and cannot meet their payments, or they forsee that in the very near future they will be in this position. So before it happens they are approaching you the creditor.

In spite of it being obvious that most financial organisations are subject to stringent concession policies where risk and other associated factors are key, I find creditors are still prone to the following habits, which in turn delays the debtors request where much time elapses, worsening the financial decision.

The debtor then finds themselves in a fix with lessor options than they had before approaching the creditor and here’s why:

i.     Dragging the review process the debtor might find that during this time, the next payment is due, increasing their delinquency level and therefore putting them at greater risk for the next step which could be legal action.
ii.    From the time of submission of the debtors request, the case has changed hands many times where the debtor is left to follow-up almost on a daily basis, only to be told that the case is now with someone else. Apon calling the debtor finds they must continue repeating themselves to the new person.
iii.   Finally on the payment cycle date, they receive a call from collections department for the new due payment and are informed ‘this is the process’....really? and where is the consideration for the debtor meeting all documentation requests for this process review immediately?
iv.    In many instances these days even with one delinquent payment, they are informed of immediate legal action, where this policy is now something new that has surfaced.

Key questions to creditors:

1.     When a debtor or their representative approaches you for review of a restructure or consolidation approval and they are either already in default, or they are business owners with a very high liability, why delay the process when you are aware of the risks for the debtor if the process is delayed? You are aware that the debtor has requested a reduced EMI so obviously in the new month which could be in one month’s time from submission, that debtor would not be able to afford that specific payment, only a reduced one, yet they are subjected to this kind of demand when delays occur and new payments are due.
2.     In some instances I’ve experienced for my clients is that once the new payment is due, the creditor’s preference is first to take legal action, then approve the request and once approved and signed, then withdraw the legal action. How does this make any logical sense when someone’s life and livelihood is at risk and so is that of their family?
3.     How does a creditor respond to such a request by asking the debtor to settle the full balance in ‘one-shot? What debtor with the cash to settle their debt in full will request a restructure or consolidation?
4.     If a debtor is heavily indebted, how is it possible to offer them a 6 month restructure for a high liability? How does this make any logical sense?

I have always spoken for debtors as they are:

a.     The faceless people;
b.     The voiceless people;
c.     The people who are not in a position of strength to make any demands;
d.     The people who must learn to eat humble pie because they don’t have choices;
e.     The people who must be subjected to all forms of humiliation, degradation, who are no longer treated as regular clients despite the fact that their position could change tomorrow morning and who go about tolerating this silently out of emotional fear, much guilt and embarrassment.

One very pertinent fact we need to remember as humans before we even think of ourselves as creditors, is that ‘it could happen to you tomorrow, debt does not distinguish, you could walk into your office tomorrow to find you are terminated and then realise you have no savings, you have a mortgage, credit cards, loans and other liabilities’.

Then I will guarantee you that you will not find one supportive person, because you will only find it if you sowed good seed in your life. If you then find yourself in this position, start thinking back to the times you were in a position to help people and you simply acted arrogant, because that is normally the case.

[Note 1:  Theda Muller is a UAE-based author of two books. She also conducts webinars and workshops on debt recovery and recently launched a company in Dubai to support debtors]

[Note 2: The views expressed are the author’s own and do not reflect in any way, the views of Emirates 24|7. Readers are advised to carry out their own due diligence before taking any decision.]
 

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