Personal Finance: Aligning your debt profile

Very soon your liabilities will be available at the touch of a button, so it is time to take stock of your financial affairs, especially if you are facing a debt-crisis or heading in that direction.

Let’s be clear – if you are in default now the same will reflect on your debtor profile so the games played over the years will come to a grinding halt. You may perceive my opinion to be harsh, but this is the fact.

Even if you are blacklisted for approved restructures, which is the normal procedure for financial institutions, your responsibility right now is to ensure that you are able to secure and meet each approved payment plan every single month. Realise that defaulting on one month’s payment, will mean that a negative action will be registered against your name and the same will be visible on your profile.

If you refute acknowledging this fact, then it is refusing to take responsibility for your debt-crisis. It will take at least five years for you to recover and perhaps normalise your profile. In a way this is a form of discipline instilled in a debtor by force, which has a positive effect, not negative as much as we wish to justify this kind of discipline as being unfair.

The core reason is that it halts your ability to continue on your credit facility spree, in turn saving your life if we really review the final outcome, because if you don’t wish to take responsibility and transform your situation and life, then the system will ensure you do and perhaps somewhere along the line, you will be grateful for the discipline. I view this discipline as your civic duty to embrace, because there are policies we must conform to if we wish to live happy lives.

Right now anyone facing a debt-crisis is far from being happy and possibly many of you have not given this new process the thought and action plan it deserves.

As an author and writer on the subject of debt, I have been inundated with requests from debtors in the UAE to write about the following…

a) To restructure leniency from financial Institutions. For example, to extend restructure tenure to as much as seven years;

b) To consolidate all liabilities under one umbrella – which is logically and practically impossible since liabilities for any individual is across multiple financial institutions.

c) To waive excess fees over and above the principle debt where the excessive fee value may have exceeded the principle debt – from my experience a generous discount may only be applied dependent on the final settlement amount and tenure of such settlement.

d) No black-listing from financial institutions for restructure – this is also impossible as the repayment habit and characteristic of any debtor is hugely important as the basis for any future credit facility request is based on such records.

As much as I would like to affirm to those facing a debt-crisis that I am on your side to help you, the fact is we cannot dispute facts, such as the confirmed default situations; the self-inflicting situations we place ourselves in by being irresponsible and continuing along the path of denial or procrastination to resolve such situations.

No achievement is easy. We should realise that there comes a time when we will be confronted to resolve major issues in our lives, because it simply cannot continue infinitum. This confrontation can come in the form of your situation becoming uncontrollable and you don’t have a choice but to address the critical matter or it is enforced by new initiatives and policies.

This is a form of self-protection and self-awareness that the Universe imposes on us because the lessons convert to sediments that contribute to our character as we progress, finally leaving us with so much invaluable experiences that we can utilize as tools and apply them effectively in our lives in the future when we need them.

I do believe we will witness some really welcoming future policies that will afford us the opportunity to align our debt situations amicably and continue enjoying our lives as we did before we faced this debt-crisis. Remember, it will take time as this is the process of transformation. But for now, we must work with the policies and tools we have in our hands, the ones that will serve us best for the situations we face right now, not tomorrow, next month or next year.

As a firm believer in policy and best practice, I uphold my beliefs that a country and its nation can only complete the full circle of success and more, if they have all their fingers on the buttons. I encourage everyone to embrace this new change, as it is for the good of everyone. It is human nature for people to react negatively and expect extra-ordinary concessions. However, we must be realistic as it is a tough process to implement, to administer and then to continue reviewing and aligning those policies for the good of all people. After all we cannot dispute the fact that what I term ‘credit hospitality’ has been over generous up until now and it is high time to pull in the reigns.

So the question is ‘why should your view change about this new policy?’ If you feel adverse about it, then it only means you have work to do on yourself as it does not pertain to finding yourself in a situation that was not self-inflicted. For instance, if you are in a debt situation because you lost your job and have no replacement job then you are responsible. Your real job was to cushion yourself over the years when the going was good. But we rarely do that. We never assume that the bottom can fall out, because when we are enjoying the good times, with free cash flowing like water, we lose that touch of realism, until the inevitable happens.

The big question is “During your good times have you at least once thought that you may face a financial crunch sometime in the future?” “ Have you been arrogant?” I can resonate with these questions as I never assumed during the good times that I could face a difficult situation. However, I did and I came to terms with it and dealt with it experiencing tons of harshness, but it made me a better person, someone who learnt how to take responsibility, not transpose the blame onto others, because whatever decisions I made, was uniquely mine.

So right here and now you need to take your own bull by the horns. Forget about embarrassment or humiliation – that is part and parcel of the package of transformation and debt recovery. Yes you must go and approach creditors, explain your story, beg for time, beg for restructure but with integrity, self-respect and meaningful emotion because your sincerity must ooze out over the table to convince your creditor that you are serious.

You mean business; keep your word and promise, without exception.

This is not a joke if you are facing a debt-crisis, neither is the option to have bad intentions, just packing your bags and leaving because you can run but you cannot hide and by that I mean not from creditors pursuing you, but from your conscience haunting you. Most of the time when we resort to this form of action, we live in fear for the rest of our lives, we always have to look over our shoulder, we have to be cautious not to divulge any true information about ourselves, our identity or history to anyone, just in case someone we speak with, is connected to someone else, who is tracking you.

Running from shirking your responsibilities will never serve you and as I keep repeating, life dictates we pay our dues, maybe not now or next year, but in its own time, when we least expect it. In fact you need to learn how to start embracing a new life, bask in the joy and pleasure it can give you, once you overcome your hurdles.

Right now I continue to assist many people in unfathomable debt-crisis situations but the key is, they want to change their situation, they want to repay their debts and be debt-free again, they are eager to approach their creditors and secure a solution because I have made them realise how important they are to themselves first, then the next.

So unless you have someone who is experienced and tough enough to advise, coach and mentor you, it could be a difficult task to change your mind-set. But it is my hope that my weekly articles will encourage you to take the next step, to go and ask for help and advice you need and to finally be on your road to recovery and in a few years, be debt-free.

[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.]