Case two: Bank’s refusal to restructure was the missing piece in the puzzle
RE, a marketing executive from the Philippines, contacted The Debt Panel in June when he felt he had run out of options. At the time, the Sharjah resident – a married father-of-two – owed more than Dh150,000 on a loan and five credit cards. While he had converted all of the credit cards to loans to secure fixed monthly instalments, he needed to restructure the loan payments as well, to ensure he could successfully pay off all the debt. The lender refused, with different departments telling him different things. With the loan repayments about 28 per cent of his salary, he was fearful his debt would spiral out of control once again.
The situation now:
RE says he is now “in a better situation” after the bank where his salary is credited finally agreed to a consolidated loan in October.
“The bank recently eased up on the requirements for top-up loans for existing account holders such as myself,” he says.
However he had to improve his credit score first to secure that offer. So, with the help of his wife and moving/delaying some payments such as rent and school fees, he paid more than twice the minimum on a credit card from the same bank to improve his position.
“Fortunately, I finally got approved for a Dh250,000 consolidation loan in October, which allowed me to close all my credit cards (except the one with the bank), pay off my other debts (family and friends) and catchup on rent and school fees.
“I also lowered my credit limit on the other credit card from Dh18,000 to Dh8,000 only. My debt burden ratio now is down to 46 per cent with only one liability (deducted automatically from my salary account) for the next four years.”
RE has no outstanding balance on his remaining credit card (this, he says, will only be used for online purchases and the monthly payment on his consolidation loan is Dh6,086.
“I have no intention whatsoever to get a new loan or credit card,” he says.
His plan now is to stay in Sharjah with any “improvements” to the family’s lifestyle to be sourced from extra income, such as bonuses or a salary increase. His Dh13,300 salary was recently boosted to Dh14,000.
“The Debt Panel has been a great help for me in terms of seeing everything in perspective,” he adds. “Each case you tackle has new lessons that can be applied in our own situation. The main take away from reading the Panel’s advice is that prevention is the best cure and discipline is key. Unfortunate events do happen, we just have to be prepared for them.”