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  • How to deal with this?

    I have a dear friend of mine which I don't know how to help him. He is in too much debt and so depressed and he is thinking to file bankruptcy. It’s gotten to the point where he is scared to answer the phone because some debt collector will be calling him and harassing him. He is a good person and he didn’t want to get into debt but now he is over the head. I’m not sure what to do to help him. And I don’t have any idea on how to get his financial affairs in order. Any ideas could be a great help.

  • #2
    To whom is your friend indebted and does your friend have an income?

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    • #3
      Experienced accountant here.

      Each person's circumstances are unique and the solutions should be tailored to the individual's circumstances.

      1) prepare a balance sheet to assess their
      a) assets
      b) liabilities

      2) then prepare a cashflow statement
      1) all income sources
      2) all cash expenses and payments


      3) need to know the nature of the debt
      1) is it consumer debt?
      2) is it mortgage debt? what is the security and security value?

      4) need to know who the debt is owed to.


      If the debt collectors are coming, then someone hasn't got paid and given the unpaid amount to a debt collection agency. Need to know what needs to be paid, and the amount involved.


      Comment


      • #4
        Great post Chris W.

        My 10 cents worth......filing for bankruptcy is not necessarily a bad outcome. I know someone who went through it and he's come out the other side in better shape both mentally and financially.

        There could be two issues to deal with -

        1. The financial position
        2. The mental state

        So dealing with the finances - an Accountant is a great starting point - and Chris W's post. Dealing with the mental toll on your friend needs a visit to the Doctor.

        What's really important is giving your friend encouragement and support. What he is going through is not life-threatening - it is life-changing. Change is scary but it can provide relief - to get that monkey off his back so to speak.

        cheers,

        Donna
        Email Sign Up - New Discussions, Monthly Newsletter, About PropertyTalk


        BusinessBlogs - the best business articles are found here

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        • #5
          Others have covered the details, but you may find this helpful. My limited understanding is that there are people who can assist. A bit like Citizen Advice Bureau budget counsellors, but perhaps more business than private debt oriented. See if one can be found. From limited experience again, among the first thing such people do is contact all the creditors to tell them that the 'budget advisory / business mentor' person is assisting your friend and that a statement of position and proposal for re-payment will be forthcoming. Usually, those involved in collecting the debt will 'back-off' for a period, when so informed. That reduces the stress load on your friend.

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          • #6
            What city is he in? Christchurch has Kingdom resources which is a free budgeting service. If it is personal debt they help you draw up a budget, show you options as bankruptcy isn’t the only one, there are less severe insolvency options, they can help you deal with your bank and may be able to get some fees etc waived if they are excessive, and if the debt isn’t over a certain threshold may even give you an interest free loan to give you a clean slate, but only after they have worked for a while and can see you are sticking to your budget and can pay it back over a period of a year or so. I’m not sure of the rules now.
            I’m not sure if they help with business debt.
            It all depends on the degree of debt he is in. If it is credit cards, and farmers cards and qcards etc this might be an option for him.
            They also help with career advice, and other support.

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            • #7
              I want to thank all of you for all the support and concern. It's a big help for sure. I will give this to him as a piece of advice.

              Comment


              • #8
                When I was tight I did the following.
                1. Stopped spending on discretionary items
                2. locked down all interest rates if possible
                3. max out the loan timeframe on all loans which were possible
                4. Keep track of all of my debt
                5. put any spare money onto the smallest debt to repay it faster
                6. when that small debt was paid off, experience the euphoria of having one gone
                7. use that money for the next smallest debt
                8. Numbers 6 and 7 rinse and repeat
                9. Keep a monthly tally of debts and assets (still do that) for mental reinforcement.

                Warning! Do not consolidate the debt into one "easy pay" loan. Your spending habits will not change if you do.

                www.3888444.co.nz
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                • #9
                  ^^ I agree with the debt consolidation strategy. It's a big winner for the lenders esp. if it was credit card (cc) debt and the cc is through them. Once the cc is cleared do you think borrowers used to putting everything cc cut it up or do they keep it and before long it's maxed it out again? Been there and done that!

                  cheers,

                  Donna
                  Email Sign Up - New Discussions, Monthly Newsletter, About PropertyTalk


                  BusinessBlogs - the best business articles are found here

                  Comment


                  • #10
                    Whatever you do , don't lend him any money.

                    If you do, be prepared to say goodbye to it for good.

                    (If he's used up all his money, he sure can do the same with yours).

                    And don't persist trying to help him if he didn't ask for your help.

                    Best thing you can do is be a friend, and spend quality time with him.

                    Does he have any extra assets that can be sold off to reduce debt?

                    Is this a temporary cashflow problem or a long term lifestyle problem?

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                    • #11
                      I shared it all with my friend and to my surprise, for the first time, I looked at his face with gladness. He looked at not that heavy anymore. When I asked him, he replied that he found this article https://www.kff.org/coronavirus-covi...substance-use/, which he found very helpful for his inner self. Well, wow, good to know then. And without further ado, I showed to him all your thoughtful words and suggestions and He said: "Please extend my gratitude to all your forum family", and he told me also that for sure he will follow all your advice which he knows the best thing he could do and he thinks to join our community too, as he added.

                      Comment


                      • #12
                        Originally posted by McDuck View Post
                        Whatever you do , don't lend him any money.

                        If you do, be prepared to say goodbye to it for good.

                        (If he's used up all his money, he sure can do the same with yours).

                        And don't persist trying to help him if he didn't ask for your help.

                        Best thing you can do is be a friend, and spend quality time with him.

                        Does he have any extra assets that can be sold off to reduce debt?

                        Is this a temporary cashflow problem or a long term lifestyle problem?
                        Yeah, this is already been applied. Thanks for your advice

                        Comment


                        • #13
                          How are you now guys? I'm feeling okay right now. Thanks to your words, it really helps me a lot.

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