Getting into financial debt

Wow, talking about coincidences. Just two days after I had written my last blog, I received a distress call from a close relative to sit in at his round-table meeting to discuss the financial problem affecting one of his brothers.

Why me, I had asked him. I would have preferred to sit out as I knew that such discussions can sometimes turn ugly. Well, he said, you seem to be one of the most knowledgeable in my circle of friends and relatives in matters of finance. You had worked in a bank not so long ago, he continued, and you are in financial planning. Besides, he added wickedly, you are family!

How was I to say “no” to helping out a close family member? So I agreed to join in their discussions.

Now what transpired if that this relative’s brother, let’s call him Chin Ho, was once running a coffee shop near one of the industrial estates on Mainland Penang. But the tenancy of the premises ran out and he was forced to vacate the premises. The only alternative location he could find was some half a kilometre away from his original coffee shop.

Though the new place was only a short distance away, it can be a world of a difference between success and failure. In Chin Ho’s case, it was failure. The number of customers began to drop. Even an extra half a kilometre proved a problem for lunch-time customers who only had about 45 minutes to one hour for their lunch. So, his business suffered and he began to rack up debts on his credit cards.

It just wasn’t one credit card. At the round-table discussion where we asked him to lay all his cards (literally) on the table, to our surprise we found that he carried a total of nine credit cards, all used up to the maximum. In addition, there were also some personal loans from the banks and of course, a housing loan. Excluding the housing loan, the total amount borrowed from the banks came to almost RM100,000. And that’s for a man in his late 30s and with a small family to support.

We were stunned. What should we do? How could we help him? Lending him the money to get out of this predicament was out of the question. That would be the easy way out; he would never learn. Besides, borrowing from the loan sharks was also out of the question. For that, he recognised the perils himself and that was the redeeming factor in his favour. So what should we do?

This entry was posted in Credit card and tagged , , , , , , . Bookmark the permalink.