When you are in debt crisis and you cannot cope, no creditor will call you to offer you help and support. So, you rather take the ‘remedial approach’ if you are in a dire situation.
The golden rules when taking this approach is as follows…
Be honest and sincere in your intentions and act with integrity. You really must want to repay the debt and complete the repayment process.
Remedial is not to be used as a bridge for your hidden agendas of not wanting to repay the debt.
Do not avoid creditors’ calls. This is critical.
Do not make false promises to pay when you know you will not be able to meet those promised deadlines.
Set your intentions to approach your creditor to present a remedial request, i.e. a restructure and/or consolidation of your existing debt liabilities over a longer tenure at a fixed interest where in some cases, a new debt agreement will be initiated and the existing one closed. This happens mostly in the case of credit card debt which bears a high interest rate.
Your next step is to prepare the following documents to present to the creditors:
a. Your valid residence/employment visa copies;
b. Current passport copy, with a validity of more than 6 months;
c. Emirates ID copy;
d. 3-6 months bank statement, in the case of an SME then up to 3 years;
e. SMEs – Current trade licence and partner residence/ownership copies with Emirates ID copy;
f. Request letter for your action, i.e. why you need this remedial alternative;
g. If you are represented by an external party, either private or remedial company, then you must present a letter of authority in favour of such party/s and a power of attorney notorized in the UAE Courts by a Notary Public. Note that some creditors do not accept the latter but in most instances they do;
h. A full schedule of your liabilities, i.e. each creditor debt;
i. A full schedule of your income and expenditure, including all personal items;
Arrange to meet the decision-maker if you can as this alleviates the decision-making process. Then request for the person’s business card, if possible. Maintain your own personal filing system with all original and copy documentation you are issued and/or presented so you are disciplined as to diligently following up and resolving any discrepancies and/or disputes you may have in the future.
It is important to follow-up until you receive a final decision. Also, ensure you are happy with that final EMI. The total EMI must be in line with minimum 50-55 per cent of your total income (DBR-Debt Ratio) and this is very important, as you must be able to sustain yourself after repaying your EMIs
Once all your debt is restructured, compile a debt schedule and make columns for each creditor with the total debt amount as a final. Place the lowest debt amount on the last right-hand column and the highest in the first left-hand column. Once you make your EMIs, the right-hand column will reduce faster than any of the others so any extra income you earn, repay an amount in that column and as soon as that column is repaid, you start with the next last right-hand column and so you start playing an exciting game with yourself of becoming debt-free. You will be amazed at the effectiveness of this column as you would have changed your emotional attitude towards your debt which would be more positive, so new energy will flow to help you to remove the right-hand columns until all of your debt is repaid.
This is the most highly effective method to repaying debt and getting on the road of recovery. The saying - When you want something you have never had before, you need to do something that you have never done before – is relevant here.
Debt situations need not have a stigma attached. It need not be demotivating or negative. It is always up to you to set your own positive pace, to make space for the new.
When people mention debt-crisis, debt-recovery, legal action, non-payment and all these negative words, it places them in a dark zone, from where we think we cannot return. But I promise you that it does not have to be that way, not for you or anyone else.
Take action and responsibility today; acquire effective tools that cost zero but will serve you on this journey. Remember, it is only about you, your well-being and that of your family or loved ones. That is all that matters.
[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.]