Personal Finance: Debtors who hesitate are lost

Procrastination is the thief of time. When you are faced with a debt-crisis, it becomes your moral duty to yourself to take immediate action. And, please, refrain from taking advice from those who have no experience. This is the key point to remember.

Below are some key reasons debtors use to procrastinate and slow down the process to repay their debt. Once you resort to these measures you will lose yourself and find the situation snowballing out of control. Then whatever action you take to prevent legal action, may be too late. So take heed and be serious about your intentions as time is of the essence.

People will advise you to take another loan and then approach your creditors with ridiculous settlement offers, i.e. 30-40 per cent discounts for direct one-shot settlements. Well realistically the kind of debtors I find who resort to these measures are the ones who are in dire delinquency i.e. 3-6months sometimes, who have newly acquired this facility and therefore not started repaying their principle debt. So how come you assume you can borrow Dh10,000 not pay your EMIs for a few months and then expect your creditor to waive 50 per cent of the principle just because you’re taking a chance? It won’t happen, be realistic, be honorable and repay what you owe and there is no sin in securing a small discount but being ridiculous is out of the question.

You do not agree to making one hole to close another. Do not heed to suggestion that does not fully support your debt situation. You key objective is to reduce each liability’s EMI (Equated Monthly Installment) and hence reduce your DBR (Debt Ratio Burden), which should be 50-55 per cent of your total income.

If you are on a mission to get yourself debt-free then compile a written plan with action dates and follow your plan:

-          Arrange to take time off from office to meet your creditors with peace of mind to discuss your debt situation and find immediate solutions.

-          Take all your legal documentation with you so they are available upon request.

-          Compile an income and expenditure statement to present to your creditors to justify your remedial requests, i.e. you need a consolidation or restructure of each account with their organisation.

-          Make notes, diarize next appointments and maintain files for each account. Following up is key when requested to do so, where no delays should occur if you wish to successfully complete the process.

-          Ensure down-payments or requested overdue EMIs are made and send the proof of deposit to your creditor because if you don’t it could further delay the process.

-          Respond to all creditor calls and requests, ignoring them will ensure legal action, which you must try and avoid at all costs.

-          If your request is declined, ask again and if you still get no joy, escalate it to the top because it is your consumer right to be heard.

-          Act with confidence; show your commitment, sincerity and integrity as much as you can.

-          Never accept someone telling you that it is impossible to secure what you want, because with enough determination you can overcome any hurdle in life, not just debt.

 If you happen to be successful with securing a loan, don’t go out on a spending spree, earmark accounts you can settle with this budget, approach your creditors for an acceptable discount, secure the liability letters from them, pay the settlement and secure the final settlement letter. Only this will improve your confidence levels and encourage you to continue along your recovery path because you would feel the relief once you have repaid these accounts and your balance is now zero. Keep the proof of settlement in a special file for future reference and never discard this very important documentation.

Remember, if you don’t take action, nothing will move because the solution will not fall from the sky. It’s your job to go out there and make the shift for yourself. Forget about feeling ashamed, degraded or humiliated because those are key lessons that transform lives and you will learn the lesson of humility, where the process itself will transform you into someone else that knows exactly what to do with the financial aspect of your life in the future, once you overcome these hurdles.

[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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