Tips on coping with debt worries
A woman looks anxious and worried. File photo
What you need to know:
Being stressed over debt is one of the worst feelings anyone has to deal with. Yet a chat with a credit adviser could reverse the situation.
Debt has come to be seen as more or less a necessary evil. With banks and moneylending institutions practically falling over themselves for customers, it is easier to get a loan now than any other time in history.
However, it is also easier to avoid bad debts. One of the ways would be seeking debt counselling and advice on managing credit, a service that is closer to you than you probably imagined.
According to Mr Daniel Babonereirwe, the general manager at Banar Collections Ltd, debt counseling services are dispensed by a credit adviser and can be useful to any borrower or business at any stage of debt.
Presently, some offer debt counselling and credit advisory services as part of their product offer.
Visit a debt counselor
Debt counselling and advice can be proactively sought before you get into debt, pre-emptively when you begin feeling debt strained and redemptively when you land into a bad debt crisis.
The ideal counselling timing should be pre-borrowing. Mr Babonereirwe advises that “A stitch in time saves nine,” but if you are already in a debt crisis, you can still be assisted.
Remember, if you are in a bad debt crisis, you are distressed and can hardly think straight. Sometimes you reach a point and feel besieged. You start working in circles. You need someone else who is not emotionally involved in your situation to professionally help you along towards a solution.
The effects of bad debts go far beyond loan security foreclosure. It also affects one’s prestige. For corporate employees, work morale and productivity greatly reduces. On the creditor’s side, bad debts will lead to loss of clients and capital.
The options
There are options you would never know exist, which the creditors may never tell you.
There are always options. For example, you can approach the creditor rather than hiding or avoiding them.
They are more comfortable knowing you still have the will to pay.
Mr Babonereirwe advises that when borrowers detect warning signs such as cash flow squeeze in their businesses, they still have an option to renegotiate payment terms with their creditors.
He calls upon creditors to consider recommending their distressed clients for debt counselling.
He adds that majority of defaulting clients don’t default intentionally.
Debt counselling helps both the creditor and debtor find a suitable win-win situation.
Advice to borrowers
•Have a good plan for the borrowed funds.
•Set personal standards higher than the repayment terms offered by the creditor.
•Acknowledge that borrowed money is never your money.
•Have a backup plan in case your original repayment plan fails.
•Never stake anything you are emotionally attached to as security.
• Read your loan contract and never rush to sign. See a credit adviser before you sign.
•Make sure your repayment plan matches your cash flow.
•Never borrow when in a crisis. You are more prone to making bad decisions.
•Never assume borrowing is the only financing option.
