To know about the background to this story, please click here.
Now, we had already established the extent of Chin Ho’s financial problems: nine credit cards and two personal loans with an outstanding balance of almost RM100,000. And that excludes a housing loan and a car loan.
What we also knew was that the banks had been calling him up to remind him to make the minimum payment for the credit cards. Unfortunately, in his financial straits, that would be very difficult, if not impossible. Besides, we found that even paying the minimum would, in the long term, not solve any problem at all. Being charged interest at 17.5% per annum means that he would be paying off the monthly interest only without servicing the principal amount.
Chin Ho wanted to declare bankruptcy as an option. Some of us at the discussion were against the idea while some others wanted to go along with him. At the end, it was decided that he go seek advice from a lawyer. Presumably, a lawyer would know best about what to do, should he want to proceed along this line.
I accompanied him to see a lawyer. Bad idea, said the lawyer, because a bankrupt would involve the closing down of any business, giving up all possessions of value, interest in all movable and immovable properties and be unable to obtain new credit. There are also travel restrictions and the bankrupt loses his passport. In short, bankruptcy damages a person’s standing in the community. The lawyer asked: “If you are not better off being a bankrupt than before you were, why do it?”
Besides, the lawyer said, a person can only be made a bankrupt if he owes more than RM30,000 to a single bank. In Chin Ho’s case, his largest outstanding credit card or personal loan did not exceed RM12,000.
Then what could Chin Ho possibly do, I asked the lawyer. So far, the lawyer’s advice had been pretty reasonable, but somehow his answer to my question beggared some belief. He suggested that Chin Ho badgered the banks to accept whatever he could pay them and consider writing off the balance. I would say that this was about the most incredulous suggestion that I’ve heard. No bank would ever do that. Anyway, it was food for thought. Who knows, perhaps the most ludicrous idea may yet work!
But getting back to Chin Ho’s problem, it was time for another round-table meeting with his relatives.
More next time….