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19 March 2024

Personal finance: Steps for the faceless debtors to overcome debt crisis

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All debt-crisis situations make you feel totally out of control, like you are clutching at straws and stagnating in life with no positive outcome.

It’s because you’re going here and there, asking this one and that one, and then finally, end up totally confused, not knowing what your first action must be. Then you have the common problem everyone has where many questions fill your mind.

“How am I going to cope? What am I going to do? This is so bad I will never see the daylight. How did this happen to me? It’s impossible to get out of this situation without money. What are the people going to say? What if it becomes legal and I lose my job? What of my creditors refuse to help me?”

There is no easy way out, you have just got to go and do what you must to overcome this hurdle. I have been highlighting the same advice over the past year because I know there are many ‘faceless’ debtors who are scared, ashamed, embarrassed, overwhelmed and living with this problem not for weeks but months and even years.

So what is your first step?


I always advise everyone to compile a schedule of your debts so that you know exactly where you are and just how much debt you are in right now. You may think this a strange instruction, but believe me most people have no clue of their total debt, let alone do they know the accurate liability with any one creditor. This is because they have not taken ownership and responsibility.

Step 1 is over. Proceed to calculate your current budget that you can afford to repay at this time and then adjust your monthly payments fairly per creditor, that is, in fairness to the creditor and an example is: don’t reduce a payment of Dh5,000 to Dh500 because that is just not logical and it will never be approved by any creditor. Be realistic with your assessment and also with your budget, don’t minimise your repayments to Dh5,000 and you end up having Dh6,000 to spend monthly. You should derive at a reasonable budget for yourself, with hardly any money left for luxuries and items you don’t need.

Step 2 is to arrange to meet with each creditor and present your entire plan, leave nothing out and explain why you reduced their payment so it makes sense to them. Also present all of your documented proof of earnings, commissions, additional income etc… 

Do not omit any key document that will support you in this process and remember, honest is the best policy because if you think you are fooling your creditor, then be assured that you are only fooling yourself.

Step 3 is to await the final outcome and/or approvals from your creditors and where you feel that you won’t be able to meet a specific payment, where it is way above your projected payment request, then arrange to meet that creditor again and request that it be revised. There is nothing like asking because if you don’t ask, you won’t get anything that was possible to get.

Step 4 is to amend your schedule as a final step, add the number of months for the new restructure and each time you make a payment, fill that block in and ensure you are always up to date. Also maintain a file for your deposit receipts so you can reference them anytime if any one payment is missing but you have met your payment.

Step 5
is to send a ‘Thank You’ note or email to your creditors because it is a token of appreciation, integrity and principle.

Step 6 is to maintain contact with your creditors if in any one month you cannot meet a specific payment. Contact them, explain the situation and ensure you secure their approval for an extension. Most of all, ensure you secure that approval in writing, be it in official letter form or email. You stand alone, normally you are the sole debtor and guarantor for your liabilities so you cannot depend on anyone else’s support.

Step 7 is that as you see your debt diminishing over the months and years, start a savings plan with the extra cash you have and ignore that growing savings plan but keep the commitment to continue topping it up, until you are debt-free. This part of the journey disciplines you to start creating wealth for yourself instead of starting to make ‘new holes’ and ending up taking 10 steps backwards instead of forwards.

There are many small steps in between, these are just guidelines and when you face small hurdles, learn to manage and overcome them.

Maybe it will not be visible at the time, but over a period it will become evident and you will come to know exactly how strong you really are. You will know how strong you are only when strong is the only option!

[Note 1:  Theda Muller is a UAE-based author of two books: Embrace Financial Freedom Volume One: 10 Proven Ways To Release Debt And Emotional Fears In Today’s Economy, and Volume Two: Releasing Fear And Bouncing Back From A Debt Crisis.
She also conducts webinars and workshops on debt recovery.]

[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.]