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Debtors, pull your socks up!

Theda Muller

By Theda Muller

Being in massive debt and trying to get yourself out of it, is not a game, you’re not juggling blocks to hope that they fit into some squares, simply you’re delusional.

The day you realise that you cannot manipulate the system and go by heresay from your friends or some associates advice, is the day you will experience that the only solution is when you take full ownership and responsibility for your debt, actions and commitments and walk the walk, without the emotional fear you have right now.

As a AED 45,000+ monthly salaried employee, with a total debt close to AED 2million, only opting to restructure your salary loan with a current AED 25,000 EMI (Equated Monthly Installment), you  assume that if you can reduce this by 50%, then you are home free? Wrong, because prior to approval of this request, the creditor should be aware of 2 very key factors:

1. That your remaining liabilities are current and not in default or legal action;

2. That your remaining liabilities are also either approved or under review for approval for consolidation and/or restructure, because the key objective is:

a. To ensure that your DBR (Debt Burden Ratio) is reduced to 50-55% of your salary;

b. That reducing the salary loan EMI will ensure that you don’t remain in the current situation where more than 50% of your salary is eliminated once that EMI is debited on salary date;

c. That once reduced you will not attempt to secure a ‘Buy-out’ from another Bank Creditor where your salary will now be transferred to the new Bank;

Banks are aware of these loopholes and deviations applied by debtors but a remedial consultant we ensure that our due diligence is applied very stringently, where these key factors are highlighted to the Bank Creditor to create awareness, if not existing, that we have those points covered. There is absolutely no way that we will encourage such deviations, then we don’t assume responsibility for the case, it’s that simple.

Most of this category of debtor has a 150-200 DBR where the policy is 50-55%, so how is it possible to achieve this industry standard percentage by just reducing your salary loan?

There is no better time than now to repay your debt, following the new regulation, as I am urging you to just avoid taking the easy way out because it is not going to serve you when you owe the money.

So repay it to your creditor, it is the right principle to follow.

I know many of you will ignore this advice, however what you don’t realise is that somewhere in your future, it will come back to you and it’s called ‘dues’, because life dictates we pay dues, not in our time, but in a time when we least expect it.

Never take any creditor’s generosity for granted, because when you do, everyone loses where the outcome can be disastrous for everyone in this cycle in the long-term. If 1million debtors repay only 50% of their debt, then there will be job losses and an economy is also affected so this entire cycle, is not just about you, no matter where in the world you are currently living.

When you seek advice for your debt problem,  then seek it from those who have been there, those who have a track record and those who give you a feeling of safeness and stability.

If you have tried approaching your creditor with no positive outcome, then seek the right advice and support, escalate your voice to the very top if you must, but get the desired results you want, because you are not refusing to repay, just you require consideration and support.

If you assume you can become wiser than a system, regulated by policy, then let me share with you that the outcome you predict or were advised on, is a short-term gain, because a creditor reserves the right to claim all of their liabilities from a debtor and that is the realism if you assumed that it will never happen.

Facing our fears is a step we must take when we have no choice, because these are all lessons that eventually form sediments of our character and this transforms into integrity and gets us through tougher times in the future.

I know, because I may talk the talk, but those who know me well, know that I have also walked the walk. I just did not get lucky, it was hard work, sacrifice and looking ahead to try to achieve whatever goals I committed to for myself.

Nobody said it is easy, sacrifice is never easy because as humans, we don’t want to sacrifice, or struggle, or even go without when we are used to spending money, mostly that we never had or worked for over the years and finally, we face a debt-crisis.

Deal with it, step up and face your problem as the tunnel does not stay dark for long, if you are prepared to put in the time, you will be rewarded. It’s very easy to devise a strategic plan to get out of debt:

1. Compile that plan;

2. Project what you can afford in EMI’s;

3. Allocate a budget for your monthly sustenance and reduce that from your salary;

4. The remaining will be allocated for EMI’s;

5. Present this plan to your creditor and go with positivity and faith, and then you can overcome anything. Just your presence in the room will change the room and the creditor you meet;

6. You may be embarrassed, humiliated and ashamed as you tell your story, but it’s part of taking the responsibility and a huge part of the lesson, because 5years from now when you want to apply for that credit card and you know that you can’t afford it, this memory will jolt you into place which will be enough for you to walk away and say no;

7. Make notes; maintain a file of your documents, cheques, official letters etc…

8. Be more organized than you ever were;

9. Make a table of all your liabilities and as you repay your EMI’s record it and see your balance reduce, only this will motivate you and rebuild your confidence;

10. Making these changes will transform your entire being;

There are no free lunches, believe that! If you make the time you will be rewarded but if you are arrogant snubbing creditors and being disrespectful, well then there are bigger lessons to learn in the not so far future. Nothing is impossible, because you can overcome and achieve any goal you set for yourself; you must just develop the mind-set.