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29 March 2024

Debtors, your 1st steps to taking debt action…

Theda Muller

Published

Despite writing on this specific topic for so many years, there are hundreds of thousands of you still out there hiding in the shadows, voiceless faceless individuals who feel shameful and embarrassed to approach a creditor, simply continuing to exist with emotional fear of a debt-crisis. You cannot advance and overcome this debt-crisis if you don’t act right now. I remain of the belief that you simply do not trust that there is a solution for you, yet there is. Brave is a 1st step, a commitment to yourself is a 2nd and then acting to set the wheels in motion, is the final step.

Nobody said it’s easy, it is one of the most difficult steps to take and then you’re in a constant state of confusion, fear, shame and embarrassment, because you have no clarity on:

a. What the best solution is for your debt-crisis problem?

b. Whom to trust to seek the best advice?

c. How to afford to pay your EMI’s, where they currently exceed your monthly salary;

d. How to stop the creditor calls;

e. How to stop creditor office visits;

f. How to protect and sustain your family and yourself;

g. How to protect your job;

h. How to find another job in a hurry, if you have lost your job;

i. How to convince creditors of your sincerity and commitment;

j. How to create an effective debt plan because you have no idea;

k. How to stop legal action from your creditors;

And the list can continue into infinitum, yet procrastination to take urgent action is always left on the back-burner until ‘tomorrow…tomorrow…tomorrow’ and it never actualizes, because of many of the factors listed above.

There is no easy way out except face your fears and the situation, because if you don’t, the situation will continue to snowball, no matter how smart you think you are, it will exceed your expectations and result in a worse situation, where perhaps, it would be out of your hands to help yourself. The problem is that it’s easier to act at an early stage, when you know within the next month or two, you will face problems, so then it’s apt to seek the right advice. If you wait, the solution will be more difficult to resolve, because most of the time when you reach this phase, then you are not in a position to negotiate much with your creditor, as the damage is already done, sometimes irreparable, then you have no choice but to face harsh consequences.

Many debtors acquire an attitude once they experienced certain phases of debt problems and they assume they are smarter than the people who face many debtors daily, have years of experience and so out comes the demands, which leaves a bad taste with the creditors. At this stage you are not able to bargain, or demand, because inevitably you will find yourself at the wrong end of the stick.

The key is ‘humility serves’, which means you acquire humility to learn to be humble, respectful, diplomatic and show some integrity and commitment, because these are the basic human principles that will help you move the debt mountains. You are not entitled, you were afforded the credit, you used it, so nobody owes you a favour to make specific demanding exceptions, as you have a moral obligation to your creditor to repay the debt and it would be exceptional if they afforded you any discounts or easier payment plans. If you find you would like to present your proposal, discuss or negotiate, then present it with the utmost integrity, respect and consideration and remember, the creditor who is experienced, will feel you and your sincerity.

I am never surprised to meet an arrogant debtor, who ‘knows it all’ and I wonder why they are even seeking help! Obviously, they tried, and it was not effective, so they approach creditors or remedial companies and once the task is completed, they act smarter than anyone else, with no sign of gratitude or thanks.

So, if you want to change your debt-crisis situation, then apply these basic principles as a guideline:

1. Create a table (excel schedule) with all your debt recorded as accurately as possible;

2. Focus on your current Total EMI’s (Equated Monthly Installments), because it may jolt you to reality to understand that you are paying more than your monthly salary in debt and understand that it needs to change fast;

3. Calculate the income you need to sustain yourself and your family and be realistic, not extravagant;

4. Now review the balance of your salary remaining and juggle figures to ascertain how much you could afford to repay in EMI’s for each account and total them. Key is trying to achieve a 50% DBR (Debt Burden Ratio) of your salary, so you have 50% remaining for debt and 50% for your personal needs.

5. Meet with each creditor and present your debt schedule, explain your detailed situation and discuss your calculations to justify how you derived at those final figures. Any supporting documentation like:

a. Reduction of salary;

b. Termination;

c. New job offer commencing soon;

d. Commission/Incentive structure reductions or elimination as this will affect your income;

Any proven reason that you have in hand to justify you being unable to pay your current EMI’s should fully support you.

The biggest key is to lose your fear, be bold, show responsibility, do the work, learn to organize, make notes, set reminders and follow through and keep your promises to yourself first, as it will not only boost your confidence, but continue to empower you to complete your debt recovery journey. When you first face this problem then most of the time, you are clueless, in a turmoil which negatively affects your emotions, then there is no clarity and you simply cannot function, hence procrastination, because desperation, aggression and anger sets in, which continues to keep you in a negative rut, unable to progress and ensuring that ‘more of the same’ flows to you, which is not what you want, but you are creating it and therefore asking for it.

This will lead to self-destruction with zero hope, and we humans are much more powerful than just accepting defeat! Anyone can be strong, you just need to put your mind to it and you will be amazed at what you can accomplish! Continuing to act vulnerable due to negative emotions engulfing you, will never serve you, because vulnerability is instability and a weakness that is not easy to overcome, so strong is the only emotion you must learn to master, if you wish to succeed on this debt recovery journey.

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 is also the CEO & Co-Founder of the remedial company EFFRS LLC, Dubai. 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.]