Personal Finance: When in debt, fundamentals to recovery same

“If you want something you have never had, then you got to do something you have never done before...”

It takes the same perseverance, persistence, commitment and dedication to recover from a debt crisis, no matter how big or small. The logic is simple, i.e. the fundamentals are the same for anyone regardless.

The key is to hold the big picture of your final destination in front of you and use that determination to transform your debt recovery journey into a positive pleasant one, an experience that teaches you to embrace the lessons of sacrifice, commitment and dedication to successfully achieve your goals and dreams.

It doesn’t matter how big or small your debt is because most of the time it is not proportional to your past or current standard of living. So the key is in learning to cope with the emotions linked to this situation and then take it step by step. Once you have taken ownership and responsibility of your debt, you will experience the initial emotion of relief because you know that now there is no turning back, this is your circus and you are now bound to deal with these monkeys.

At the end of the day, your debt will be reviewed by your creditor who will then assess your ability to meet future payments. Creditors are ready to review such cases, all you need to do is ask. If you don’t ask, you will never know. The worst that could happen is you get a ‘No’ for an answer, but my advice is to be persistent. Ask again until you receive a positive response to review your situation.

Inevitably the breakdown will be in proportion to your affordability, so it is assessed in line with your income and expenditure. Therefore, it does not matter what your situation is, just hold onto the belief that it will be amicably resolved and it will.

It’s not rocket science that most people facing a debt crisis has superceded their standard of living thresholds, whether you are in debt for Dh100,000 or Dh20 million, the situation is the same, because for sure a debtor indebted for Dh100,000 would not have qualified for credit facilties of Dh20 m. So the ratio of indebtedness is on par with the debtors overrall status and hence my point, there is no difference when you evaluate the debtor.

The key is resolving the problem, mentally preparing yourself to commit to the next few years to repay your debt without fail and rebuilding your credibility and integrity with your creditors.

People always tend to scorn debtors who are indebted for millions. However debt is debt. Especialy when defaulting, there is absolutely no distinction. The risk for the creditor is higher to recoup their outstanding dues from the debtor with the higher debt, as they are perceived as a higher risk. In my opinion this is the only differentiating factor.

I would not advise anyone who have less debt to be less serious in their commitment to becoming debt-free, because the decision is personal and for the debtor with less debt it could mean they suffer more when recovering as they are unaccustomed to incurring such debt because for them it could be huge. [Note: I said personal but generally there is no difference].

Most of the time for debtors who are indebted for millions are accustomed to high finance where most are entrepreneurs or business individuals. So for them, recovery could be easier as they have the knowledge and experience to generate a higher income in the future to service and deplete that debt. That said, they could require a form of relief by minimizing their payments where creditors are open to discussion as long as the debtor is authentically sincere and it must show. Remember, creditors are experienced where it is their job to assess you in a few minutes so don’t waste the first meeting to show this sincerity.

These are no conflicting statements just realism. That is the way in the real world. In my experience I found the smaller debtors more willing to repay their debt, simply because they are simpler individuals who view this situation more seriously where most of the time it’s because they are salaried with a fixed income with no source of additional income.

Finally there are debtors who are salaried who have far exceeded their ability to repay their debt as they too are only on fixed salaries. However, there is always a way because you need to gain clarity of your situation first, record your entire financial situation and then review the possibilties, perhaps in conjuction with a professional who can advise you. But only do this if you have absolutely no knowledge, experience or have no clue of your first starting point, because it is of utmost importance that you receive the correct guidance and advice if you are clueless.

There is nothing to be ashamed of except take ownership and responsibility and thereafter the entire process will be a natural progression with improved ease, finally achieving your destination.

My objective in this process when assisting and supporting a debtor is to design a new softer humane experience for the debtor, because only this will ensure complete co-operation, absolutely no adversity or resistence and it will raise the profile of the negative stigma attached to debt collection for decades.

Debt is not a disease, it is an experience, a lesson and a situation you can overcome. You just need to take the first step in the right direction.

[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.]

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