In a debt spiral? huwag ka magtago!

Just got a call from a friend of mine who says that the credit card companies have been calling her non-stop trying to collect the 'utang' she owes. She doesn't have the money to pay so she’s doing what most people do - HIDE. My friend is in what they call a debt spiral – forever living with debt.

I have been on both sides. I have borrowed money and I have lent money to people. I know what it feels like to be behind on payments and I know what it feels like when delinquent borrowers don't answer my calls or texts!

There is one thing that lenders hate more than people who are late in paying and that is, people who HIDE! Look, if you borrowed money, the least you can do is pay it back! My mom always told me that 'your name is more important than money. Money can always be made if your integrity is intact but if your name is gone it’s much harder to make money.'

Take it from me... A lender will appreciate it more if you don't hide even if you have no money to pay and in most cases they may even help you by lowering interest payments and waiving charges.

Here is a basic step-by-step system on how to get out of a debt spiral:

• Commit. Make a promise to yourself that you will pay-off your debts.
• Stop borrowing! You can't borrow to pay off another loan. You are just creating a deeper hole for yourself. Tell the truth and tell everyone to give you time to pay off your debt. Don't be scared of threats of legal action. After all you can't squeeze blood from a stone. Panicking and borrowing to pay off other loans will cause more harm than good in the long run.
• Stop Spending! Just because you stopped paying your debts it doesn't give you the right to spend. Your priority is basic needs like food, shelter and transportation. After that it’s paying off debts! No new clothes, no texting, no going out! Sell unneeded assets. Look it’s probably all of this that got you in debt in the first place. You have had your fun now it’s time to pay it back.
• Work. Take a part time job. Work overtime. Do whatever it takes to make extra money so you can pay off your debt faster.
• Make a promise and pay. It doesn't matter how much. It could be 1 peso per day. As long as your lender is seeing your commitment to pay then they will help you. Make your payments achievable so that you don't break your promise, most people are so scared of their lender that they make promises they can't achieve. It’s better to under promise and over deliver.
• Negotiate. You only negotiate once you have re-established your credibility and have made consistent payments. Negotiate to waive penalty charges and additional interest or even to lower the loan itself. Just make sure you keep paying.

If you want help to get out of the debt spiral email me on

hoover@barongroup.com.ph.