Question: Is there hope for someone who is so deep in debt with hardly any means to repay?—asked at “Ask a friend, ask Efren” free service available at www.personalfinance.ph and Facebook.
Answer: Every morning as I drive down the road of a subdivision, I would notice this elderly couple walking on the side of the street.
Where they are headed each morning I do not know. I never stopped to ask.
But their appearance gave an indication of what they had been through.
Their clothes gave the impression that the elderly couple did not have much by way of financial resources.
Their faces bore many wrinkles, perhaps brought on by the decades of worrying about their tomorrow.
The man had a huge lump on the right side of his neck while the woman had cataracts in both eyes.
Yet, they would always be walking together, hand in hand to wherever their destination was.
This will sound like a cliché but to the elderly couple, life goes on.
As to your question, there is life after debt, including debilitating debt. Provided you did not end up in heavy debt because of fraud, lenders and the law itself provide the remedies.
If you are not yet substantially past due with your debt, lenders offer loan take outs through what is called refinancing over a longer period. Exhaust your options first with those lenders that require many documentation as their interest rates tend to be lower than those where credit is easily secured. The combination of lower interest rates and a longer repayment period will lead to lower cash outflows for debt payments.
The lender you are past due with may offer a restructuring of your debt also over a longer period and, if they are generous enough, lower interest rates. But you should inform your creditor of your difficulty in meeting payments ahead of your loan payment due dates so that they do not get the impression that you are trying to renege on your financial obligation. This is critical especially in situations where you issued post-dated checks. Should such checks bounce on account of you not requesting your creditor for restructuring beforehand, you might end up being the respondent to a case filed against you under Batas Pambansa 22, a law penalizing the making or drawing and issuance of a check without sufficient funds or credit.
Should you really find yourself in a bind, there is the Financial Rehabilitation and Insolvency Act (RA 10142), a law that provides for the rehabilitation or liquidation of financially distressed enterprises and individuals. Under FRIA, your options as an individual are to: 1) petition the court for a suspension of payments, and 2) petition the court for voluntary insolvency. Under the same law, however, lenders may file a case of involuntary insolvency against you.
So far, we have talked about options under the practices and laws of man. But why not avail of your option under the law of the One from above.
Luke 12:58-59 says, “For example: when you are going to court with your opponent, make an effort to settle with him on the way, or he may drag you before the judge and the judge hand you over to the officer and the officer have you thrown into prison. I tell you, you will not get out till you have paid the very last penny.”
Anticipate debt problems. The minute you find uneasiness in your finances, do not be in denial. Do not also be embarrassed to approach friends or professionals who can and are more than willing to help you out.
Efren Ll. Cruz is a Registered Financial Planner of RFP Philippines and can be reached at 0917-5050709 and efren@personalfinance.ph. To know more about personal finance, visit our website at www.personalfinance.ph for the free tools.
And if you want to learn about our EnRich™ Getting Out of Debt program, visit www.personalfinance.ph/good.html. Attend the 59th RFP program in January 2017. To inquire at info@rfp.ph or text <name><email><RFP> at 0917-9689774.