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08 December 2023

Personal finance: How we treat debtors matters

Theda Muller

By Theda Muller

The question is, why are many creditors so reluctant to tender help when the debtor seated across their table has an authentic story?

Creditors are experienced enough to evaluate a debtor in a few minutes because that is their job, especially those dealing in delinquency.

This situation includes trading suppliers who have become ruthless in spite of an honest trader/ debtor, who is still here to repay his debt and has taken ownership and responsibility for his PDC's outstanding with the supplier. Both parties mutually agree to swop goods and cash for the PDC's, the trader/debtor delivers the materials and pays the cash, the supplier accepts it all in line with their agreement, but then does not return the PDC's, rather speeds off to institute legal action the same day.

Dire situations got real for those traders facing a debt-crisis of a sizeable magnitude, but the real situation is two-fold:

1.      Many are suffering in spite of trying their hardest where being honest and sincere in their intentions with their suppliers, is not paying off for them.

Instead they face a nightmare daily because they make an agreement with the supplier to offset goods they have in stock with the supplier, in exchange for returning the same value in PDC’s held by the supplier.

The goods are delivered where the trader/ debtor also makes a partial cash payment and is promised the return of his PDC’s the next day, remembering he acted in good faith expecting the same from the supplier.

2.     The second very real scenario are the traders/debtors who have secured large loans from banks and stashed the funds elsewhere and now presenting themselves in a very pretentious way as if they are cash-strapped, when this is not the case.

Unbeknown to them, the creditor or mediator evaluating their case is able to derive at the true situation as it’s not rocket-science to come to this conclusion.

In this instance I say if you as the trader/debtor are not transparent, operating with hidden agendas and the creditor treats you well but later discovers your under-handed devious actions, then you do not deserve sympathy for being dishonest so whatever comes your way, is self-inflicted.

Hence SME's are not only suffering at the hands of financial institution creditors when they do not co-operate, but also the trading suppliers so they endure this victimisation from both sides and I know as I get the complaints first-hand.

Would it not be beneficial for a trading supplier to co-operate so that they in turn can evolve, retain their trader/debtor client who has a sterling previous record with them for years and continue being in the business?

Not every trader/debtor has not taken responsibility, where some were not afforded the opportunity to discuss and amicably resolve their problems but nobody sees this so the bare facts are unknown, just what is visible at face-value is how they are judged.

We cannot say if someone does not want to discuss their problems, or do not have any foreseeable solution to repay their debt, then there is no point in discussing anything.

Fact is that is not the way it works because there is always a solution like offsetting materials for overdue credit facilities and keeping the door open for all parties business to start evolving again, even on a small scale, because it is better than doing nothing.

When a debtor has taken the time to request reviewing their debt situation then it has a value, but at the time it is not appreciated or respected for what it is worth, because generally debtors are treated like they are diseased most of the time, which is why they eventually withdraw into their cocoon.

In essence the picture isn't small at all; it's completely out of control.

Somehow humans in a position of strength assume they are immune to facing a debt-crisis in the future themselves, where it could happen to anyone. Debt does not distinguish but the big lesson in life is if you can help, then do the right thing as you would have sown good seed that in turn reciprocates in ways you could hardly imagine.

You're not just helping one individual, more than likely your help will ricochet into family lines, employees, clients, suppliers and much more within the cycle of their personal and business lives.

This extends to fully supporting countries’ economies and the growth thereof instead of the demise of many in this cycle.

Viewing it any other way is short-sighted and you don't just get to act arrogant and smart when you refuse and demand, because then you are building resistance for yourself which directly affects you in many other ways.

I have encountered many angry creditors who don't see the light and that's because they are under pressure, angry, frustrated, maxed out to achieve targets and so it doesn't matter how they treat debtors, what matters are their own goals.

The biggest lesson in life is when you give of yourself and it does not have to be money and when you are placed in a position to help a desperate situation and you don't, then there is something wrong with you.

Yes I get the debtor was afforded the credit facility, but I also get that:

1. Not everyone is reckless or careless;

2. Sometimes it's misjudging situations;

3. The bottom falls out of people's world's without notice like they always do;

4 We get lost in the world of credit and forget ourselves because people are human, nobody is perfect;

e. You lose your job without prior announcement and the safety net you planned just never materialized;

f. Supplier credit facilities are revoked without notice due to market conditions so you cannot make sales to supply goods to your customers;

So, you be the judge. is it self-inflicted? Not all the time but beating old drums is not going to resolve the crisis at hand, being realistic and understanding will do the job.
I could never turn my back when I am in a position to help and by the same token I could never say 'It's not my problem, I don't care, I never made that debt'.

The solution is if there is a problem, address it, try to resolve it and move onto the next one.

I will admit that not every case is doable, some have huge risks including obvious red flags then those are managed in a way that eliminates creditor risks.

There are policies that must be adhered to without exception, which I am the first to respect and it’s not being hypocritical, it’s just the way it is, some people do not deserve the support simply because the negative writing is on the wall and cannot be ignored.

If the situation can be transformed then in this way the debtor is afforded the privilege of affordably repaying their debt, the organization is able to recoup their money and the country can continue growing to the next level and the next.

Collectively creditors can make a difference because they hold the power to do so.

Money makes the world evolve, we all need money, individuals, families, business owners, entrepreneurs, university students, companies, organizations and economies but it all starts at the smallest point, the debtor. So if this important cog in the wheel must be eliminated then there is a problem, because insurance companies who compensate these losses are not a bottom-less pit ,as there will come a time that premiums will be too high and therefore they will not be the new paymasters anymore.

We need to think and sincerely without any box, without the norm conformities and review the situation as we see it right now, not tomorrow or next month as tomorrow creditors could be without a job, not to mention the debtor who has absolutely no recourse as they slip into the 'voiceless faceless people' category that is rife for decades.

[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.]