WEBVTT - When does debt become bad for you? | EP 14 0:00:00.000 --> 0:00:02.310 This is a C. N. A. Podcast. 0:00:03.740 --> 0:00:04.110 Can 0:00:04.110 --> 0:00:07.890 you give us your quick thoughts on the following credit cards? 0:00:07.900 --> 0:00:09.720 This is not your money buy 0:00:09.720 --> 0:00:10.900 now pay later 0:00:10.910 --> 0:00:13.140 by only you have provided for it. 0:00:13.150 --> 0:00:14.750 YOLO spending. 0:00:14.760 --> 0:00:17.020 You live only once you do want to live in 0:00:17.020 --> 0:00:17.419 debt 0:00:17.430 --> 0:00:19.010 debt spiral. 0:00:19.020 --> 0:00:21.540 You want to climb up. You have to make the 0:00:21.550 --> 0:00:22.740 effort good 0:00:22.739 --> 0:00:24.220 debt versus bad debt. 0:00:24.230 --> 0:00:26.880 All debts, you must know that you can pay before 0:00:26.880 --> 0:00:27.380 you take on. 0:00:27.390 --> 0:00:28.460 Thank you. 0:00:43.060 --> 0:00:46.159 Thanks for joining us on money talks. I'm Sara al Khaldi. 0:00:46.170 --> 0:00:49.580 Have you seen something online that you simply had to 0:00:49.580 --> 0:00:52.260 have and bought it? Even if you didn't have the 0:00:52.260 --> 0:00:55.370 cash for it? That's where a range of credit comes 0:00:55.370 --> 0:00:58.780 in credit cards installment payments and by now 0:00:58.795 --> 0:01:02.295 now pay later schemes. There are so many options. If 0:01:02.295 --> 0:01:05.435 you really want to make that purchase. What we may 0:01:05.435 --> 0:01:07.694 not know is that it could come at a heavy 0:01:07.694 --> 0:01:11.115 cost in the end pushing back payments can become a 0:01:11.115 --> 0:01:14.385 pile of debt that can also get out of control. 0:01:14.395 --> 0:01:18.115 So what do a few late credit card payments turn 0:01:18.125 --> 0:01:21.705 into a serious problem? What can you do when you 0:01:21.705 --> 0:01:25.115 fall behind on your bills? And it's all debt really 0:01:25.115 --> 0:01:25.880 bad 0:01:26.050 --> 0:01:28.800 with us to talk all about. This is Tan Women 0:01:28.810 --> 0:01:33.720 of credit counseling Singapore. It's an independent nonprofit social service 0:01:33.720 --> 0:01:39.700 agency that provides financial counseling and debt management services. Thanks 0:01:39.700 --> 0:01:42.420 so much Raymond for joining us today and thanks giving 0:01:42.420 --> 0:01:43.360 us your time 0:01:44.750 --> 0:01:47.400 now. I'm sure you've heard all kinds of stories when 0:01:47.400 --> 0:01:50.270 it comes to debt problems, especially with the work that 0:01:50.270 --> 0:01:56.280 you do. What was the biggest debt issue that you've encountered, 0:01:56.290 --> 0:01:59.090 The debt size. Right. I think it was about two 0:01:59.090 --> 0:02:03.500 million unsecured borrowing. So it's a lot of money, mortgage 0:02:03.500 --> 0:02:06.490 and everything. It's about two million. And in fact 0:02:06.505 --> 0:02:10.905 We have a handful of people going $12 million dollars 0:02:10.915 --> 0:02:13.955 that we actually managed to work out repayment arrangement for them. 0:02:13.965 --> 0:02:16.514 It's a big commitment for them to pay of course, 0:02:16.514 --> 0:02:19.905 with the support of their families, not the families members 0:02:19.905 --> 0:02:22.695 helping them to pay, but the family members will take 0:02:22.695 --> 0:02:25.544 care of the household expenses so that the person can 0:02:25.544 --> 0:02:28.255 use his own earnings to make the repayment. 0:02:28.490 --> 0:02:32.550 Yes, they do $2 million dollars um sums related to gambling. 0:02:32.550 --> 0:02:34.799 As you know, once you touch on gambling, it's a 0:02:34.800 --> 0:02:36.480 lot of money and of course some of them, they 0:02:36.480 --> 0:02:39.540 say they lost in stock market, so they punch in 0:02:39.540 --> 0:02:41.859 that sense. So once you touch on this type of 0:02:41.870 --> 0:02:46.620 investment or gambling, that size is usually very huge. Generally 0:02:46.620 --> 0:02:49.630 speaking bigger than other people who are more like spending 0:02:49.639 --> 0:02:52.820 or do the job or due to other reasons? 0:02:53.260 --> 0:02:58.930 How often do you come across people with serious debt problems? 0:02:58.930 --> 0:03:01.209 And is there a certain type of person that would 0:03:01.210 --> 0:03:04.770 fall into this or do they come from all walks 0:03:04.770 --> 0:03:07.880 of life? All walks of life? Being in debt doesn't 0:03:07.880 --> 0:03:11.770 mean that the persons are not educated or not financially savvy. 0:03:11.780 --> 0:03:15.840 We see clients from people who do not have a 0:03:15.840 --> 0:03:17.139 lot of education 0:03:17.300 --> 0:03:21.900 to people who are university graduates and post grads. We 0:03:21.900 --> 0:03:25.380 see people who are earning not a lot of money. 0:03:25.389 --> 0:03:28.370 There were people who used to earn better income that 0:03:28.370 --> 0:03:31.769 qualify for credit cards and subsequently, because of employment issue 0:03:31.770 --> 0:03:33.350 and whatever other issue, 0:03:33.919 --> 0:03:36.560 Their income drops substantially. So when they came to us 0:03:36.560 --> 0:03:40.090 they may be earning less than $2,000 a month, but 0:03:40.090 --> 0:03:42.500 we also have people who earns five figures a month 0:03:42.500 --> 0:03:44.770 to come to see us. Yes, it's really all walks 0:03:44.770 --> 0:03:47.670 of life because the thing is getting to that is 0:03:47.670 --> 0:03:50.370 normally not due to just one reason. It's normally a 0:03:50.370 --> 0:03:51.490 few reasons 0:03:51.920 --> 0:03:56.450 it could be employment related meaning Picard when times is 0:03:56.450 --> 0:03:59.490 not good, just like covid time, people are asked to 0:03:59.490 --> 0:04:02.640 work three days week off for this week and your 0:04:02.650 --> 0:04:07.440 income will drop substantially, but commitments already made and it's 0:04:07.440 --> 0:04:08.010 good spending 0:04:08.010 --> 0:04:09.830 is already high or is 0:04:09.830 --> 0:04:13.100 already there. But it's more of the commitments spending, you 0:04:13.100 --> 0:04:15.650 can do something about it to a certain extent, 0:04:15.890 --> 0:04:19.250 but commitments, meaning that you already taken up a few 0:04:19.250 --> 0:04:22.480 loans that you need to service that we will have 0:04:22.480 --> 0:04:25.780 to continue to pay even during covid time. So if 0:04:25.779 --> 0:04:29.619 I have very high commitments, I will find very challenging 0:04:29.620 --> 0:04:32.850 if I have a pay cut. But this is of 0:04:32.850 --> 0:04:34.100 course job loss 0:04:34.510 --> 0:04:37.000 and if I do not really have a lot of 0:04:37.010 --> 0:04:38.910 savings that can see me through until I get my 0:04:38.910 --> 0:04:42.650 next job, that means people will rely on credit facilities 0:04:42.650 --> 0:04:45.330 to take care of their living expenses of course there 0:04:45.330 --> 0:04:50.849 are other reasons like overspending basically spending without planning and 0:04:50.850 --> 0:04:53.480 of course there are also some unfortunate reasons that could 0:04:53.490 --> 0:04:55.880 be due to a sudden medical bill that is really 0:04:55.880 --> 0:04:59.989 huge and perhaps there's no sufficient insurance coverage or no 0:04:59.990 --> 0:05:03.130 coverage at all. There are also other reasons like 0:05:03.320 --> 0:05:07.729 the person is really kind. So the friends of the 0:05:07.730 --> 0:05:10.599 family members come and ask him for a loan and 0:05:10.600 --> 0:05:15.220 then he doesn't have savings himself but he wants to help. 0:05:15.230 --> 0:05:19.060 So he take credit facilities to give up the loan 0:05:19.070 --> 0:05:23.349 or agreed to be a personal guarantor. Now the friend 0:05:23.350 --> 0:05:25.880 of the family members may not be a bad person 0:05:25.880 --> 0:05:28.180 who borrowed and didn't want to repay. 0:05:28.350 --> 0:05:31.500 But the problem is the person really got no way 0:05:31.500 --> 0:05:34.020 to repay you, but you are the person who took 0:05:34.020 --> 0:05:37.170 up the loan, You are the personal guarantor, the creditors 0:05:37.170 --> 0:05:39.560 will come after you because you are the one who 0:05:39.560 --> 0:05:40.110 borrow it 0:05:40.480 --> 0:05:44.070 here in Singapore. A lot of us have that mortgage 0:05:44.080 --> 0:05:49.680 payments for example, some have personal loans for renovations, weddings, 0:05:49.680 --> 0:05:53.220 credit cards are quite common. So when does that 0:05:53.230 --> 0:05:57.510 become a problem? Pretty much everyone borrows that become an 0:05:57.520 --> 0:06:01.969 issue is that the outstanding amount is increasing over time. 0:06:01.980 --> 0:06:03.890 That means I'm going more and more that is 0:06:03.890 --> 0:06:04.930 taking up more 0:06:04.940 --> 0:06:07.469 because I'm boring more and 0:06:07.700 --> 0:06:10.300 it will be a serious problem when I can't even 0:06:10.300 --> 0:06:13.950 service my debts or I'm actually borrowing to service my debts? 0:06:13.960 --> 0:06:17.279 That is really a problem. And if my creditors start 0:06:17.290 --> 0:06:20.500 calling me that is a serious problem, 0:06:20.670 --> 0:06:22.970 then of course the most serious one is when my 0:06:22.970 --> 0:06:26.900 creditors actually take legal actions against me because of me 0:06:26.900 --> 0:06:30.900 not making payment promptly or not making any payment at all. 0:06:30.910 --> 0:06:34.220 So there are different stages. But the red flag is 0:06:34.230 --> 0:06:37.520 when I look at my money statements, it keeps growing 0:06:37.529 --> 0:06:41.530 and I actually have to use credit to pay for 0:06:41.529 --> 0:06:45.370 my living expenses before my next paycheck. But of course 0:06:45.370 --> 0:06:48.820 I said, once the phone starts coming, that is definitely 0:06:48.830 --> 0:06:49.200 that 0:06:49.550 --> 0:06:54.730 you talked about the reasons why people find themselves in 0:06:54.740 --> 0:07:00.419 debt problems. Are there similarities among the people who have 0:07:00.430 --> 0:07:03.510 this problem? Because you mentioned they could come from all 0:07:03.510 --> 0:07:07.860 walks of life, they can have big paychecks from your 0:07:07.860 --> 0:07:09.770 experience or their similarity. 0:07:09.780 --> 0:07:12.430 I can say that they really have a similarity because 0:07:12.440 --> 0:07:15.210 it can be arranged in terms of their earning capacity 0:07:15.220 --> 0:07:17.110 in terms of their education level. 0:07:17.350 --> 0:07:20.780 But I would say the majority of them, 60, of them, 0:07:20.790 --> 0:07:25.230 there are more males than females really why the men 0:07:25.230 --> 0:07:30.150 tends to spend on big items, like maintaining a car. Yes. 0:07:30.150 --> 0:07:32.980 And maintaining current Singapore is really expensive 0:07:33.360 --> 0:07:38.210 increasingly now we are seeing buy now pay later schemes. 0:07:38.220 --> 0:07:42.360 On one hand, it helps people who are trying to 0:07:42.360 --> 0:07:45.230 make a big purchase without really burning a hole in 0:07:45.230 --> 0:07:48.510 their pocket. Interest free is what they 0:07:48.595 --> 0:07:52.055 call it as well. But has it led to overspending 0:07:52.055 --> 0:07:55.985 here in Singapore and how can we protect ourselves from 0:07:55.985 --> 0:07:57.615 spending too much? 0:07:57.625 --> 0:08:00.305 We don't really have data on this B. M. P. L. 0:08:00.315 --> 0:08:03.735 And my understanding buy now pay later at this juncture. 0:08:03.745 --> 0:08:06.575 I don't think there are many expensive items that you 0:08:06.575 --> 0:08:09.475 can really buy now. Pay later. That said 0:08:09.650 --> 0:08:13.060 even small amounts can become a problem. If I buy 0:08:13.060 --> 0:08:16.090 many things under B. M. P. L. It could add 0:08:16.100 --> 0:08:20.540 up to a substantial amount if I buy one item 0:08:20.550 --> 0:08:24.630 $300 to repay over three months, $100 per month. I 0:08:24.630 --> 0:08:27.600 can not a problem. Then I go and buy another 0:08:27.600 --> 0:08:31.910 item $600 spread over three months. So it's $200. I 0:08:31.910 --> 0:08:34.780 think I still can manage 200 but I forgot already 0:08:34.780 --> 0:08:38.360 committed 100 then now 200 it becomes 300. 0:08:38.660 --> 0:08:41.190 If I'm not very clear about my cash flow position 0:08:41.190 --> 0:08:44.080 and things like that. In reality maybe I can only 0:08:44.080 --> 0:08:48.090 commit up to 100, but now I got $300 to 0:08:48.090 --> 0:08:52.280 service and I continue to spend as per normal then 0:08:52.290 --> 0:08:54.730 I may find I may not have enough money. You 0:08:54.730 --> 0:08:56.700 know then the thing is that if I got savings, 0:08:56.700 --> 0:08:58.449 okay I used my savings to paper. If I don't 0:08:58.450 --> 0:09:01.390 have savings that I may actually find money too tight 0:09:01.400 --> 0:09:02.750 or money not enough. 0:09:03.000 --> 0:09:06.590 So making too many commitments at one shot during a 0:09:06.590 --> 0:09:10.050 short period of time it can become a problem. So 0:09:10.050 --> 0:09:12.040 it's not that you can't buy things. It's just that 0:09:12.040 --> 0:09:14.010 when you buy you need to know do you have 0:09:14.020 --> 0:09:16.360 the money to service it? If you buy it on 0:09:16.370 --> 0:09:17.870 installment payment? You 0:09:17.870 --> 0:09:22.080 talked about when debt is a problem? And the red 0:09:22.080 --> 0:09:25.510 flags that we have to watch out for? What point 0:09:25.510 --> 0:09:27.880 does it become out of control that you really need 0:09:27.880 --> 0:09:29.300 to go seek help 0:09:29.540 --> 0:09:33.490 if I really notice my outstanding keep going up and 0:09:33.490 --> 0:09:37.420 not down. I should be sitting down to take stock 0:09:37.429 --> 0:09:39.280 and see whether I need to stick up or not. 0:09:39.290 --> 0:09:43.480 If I receive a phone call from my creditors definitely 0:09:43.490 --> 0:09:46.179 value and do something about it or the fact that 0:09:46.190 --> 0:09:49.790 I need to apply for new credit facilities in order 0:09:49.790 --> 0:09:51.620 to take care of my expenses 0:09:51.635 --> 0:09:54.795 to make payment to my assisting credit facilities. That is 0:09:54.795 --> 0:09:57.825 definitely time to do something about it. 0:09:57.835 --> 0:09:59.145 What can they do? 0:09:59.155 --> 0:10:01.685 Of course they can come forward to credit counseling. Singapore 0:10:01.695 --> 0:10:05.345 for assistance. We hold a weekly talk on how to 0:10:05.345 --> 0:10:08.035 manage a debt problem. Every week we have an english 0:10:08.035 --> 0:10:08.610 version 0:10:08.850 --> 0:10:11.400 either once to twice a month. We have a chinese 0:10:11.400 --> 0:10:15.100 version is free of charge. Go to our website www 0:10:15.100 --> 0:10:18.739 dot c C S dot org dot S G. We 0:10:18.740 --> 0:10:21.890 will talk about the dues and the don's. We'll talk 0:10:21.890 --> 0:10:24.689 about what are the options available to address the debt 0:10:24.715 --> 0:10:29.495 problem. We also talk about if I can't service my debts. 0:10:29.505 --> 0:10:34.065 What possible collection actions I may face. But assuming after 0:10:34.075 --> 0:10:36.554 attended to talk, you are still confused or you would 0:10:36.554 --> 0:10:39.135 like to speak to someone just to get a new 0:10:39.135 --> 0:10:42.895 treated party opinion. You are most welcome to fill up 0:10:42.905 --> 0:10:46.425 the counseling request package so you can have a private 0:10:46.425 --> 0:10:48.595 session with our credit counselor. 0:10:48.900 --> 0:10:51.800 And the credit counselor will help you to stop take 0:10:51.809 --> 0:10:55.350 and work with the borrower to draw up a monthly 0:10:55.350 --> 0:10:58.520 living expense budget and help them to work out a 0:10:58.520 --> 0:11:02.600 repayment arrangement to their creditors. We will then drop a 0:11:02.600 --> 0:11:06.960 proposal to submit to his creditors on his behalf 0:11:07.200 --> 0:11:09.710 and then the creditors will then decide whether they are 0:11:09.710 --> 0:11:13.460 prepared to accept what he proposed if the creditors except 0:11:13.460 --> 0:11:16.580 what he proposed then now the ball is in his court. 0:11:16.590 --> 0:11:19.079 He just need to make payment according to what he 0:11:19.080 --> 0:11:22.580 has proposed and as long as you make the payment 0:11:22.590 --> 0:11:25.020 in full on time every month, 0:11:25.230 --> 0:11:27.530 he can see himself become debt free a few years 0:11:27.530 --> 0:11:28.900 down the road. But at the 0:11:28.900 --> 0:11:29.939 end of it, you still 0:11:29.940 --> 0:11:32.380 need to pay the debt. Of course people who chose 0:11:32.380 --> 0:11:34.349 not to pay their debts. They will have to face 0:11:34.350 --> 0:11:39.060 consequences meaning facing legal actions that includes being made a bankrupt. 0:11:43.490 --> 0:11:46.550 Hi, I'm Adrian Tan and I'm Christina robert. We are 0:11:46.550 --> 0:11:48.390 the host of a new podcast called 0:11:48.390 --> 0:11:50.540 working. we're here to get into the essential 0:11:50.540 --> 0:11:52.260 things that no one tells you about 0:11:52.260 --> 0:11:53.220 working in company 0:11:53.220 --> 0:11:54.980 culture. From office politics to 0:11:54.980 --> 0:11:56.360 dealing with burnout. 0:11:56.370 --> 0:11:59.760 If you've ever wanted to eavesdrop on an interesting conversation 0:11:59.760 --> 0:12:01.780 by the water cooler. This podcast 0:12:01.780 --> 0:12:02.959 is for you look 0:12:02.960 --> 0:12:05.689 out for our episodes wherever you get your podcast, 0:12:10.130 --> 0:12:12.620 some people might think, oh I have a debt problem, 0:12:12.620 --> 0:12:15.720 let me just file for bankruptcy. What are the implications? 0:12:15.730 --> 0:12:18.800 Okay, I think bankruptcy should be seen as the last 0:12:18.809 --> 0:12:21.690 resort to manage the debt problem. If a person have 0:12:21.690 --> 0:12:24.210 a debt problem, I would strongly suggest that the person 0:12:24.210 --> 0:12:29.080 find alternative solutions If all solutions has been explored and 0:12:29.080 --> 0:12:33.010 didn't work, of course the person may want to consider bankruptcy. 0:12:33.240 --> 0:12:38.459 Other solutions include talking to your creditors directly. Some creditors 0:12:38.460 --> 0:12:41.980 may offer you their own in house debt relief plan. 0:12:41.990 --> 0:12:44.750 If that helps, then there's no need to go for bankruptcy. 0:12:45.040 --> 0:12:47.829 But assuming you can't work things out with all your 0:12:47.830 --> 0:12:50.390 creditors and you have nothing that you can sell to 0:12:50.390 --> 0:12:53.000 raise funds. Of course you can come forward to credit 0:12:53.000 --> 0:12:56.240 counseling Singapore if you are suitable and you want it, 0:12:56.250 --> 0:12:59.800 we can put up a debt management program. But assuming 0:12:59.800 --> 0:13:02.710 the person can't even worked out a debt management program 0:13:02.710 --> 0:13:06.610 to us and no other ways then of course bankruptcy 0:13:06.620 --> 0:13:10.550 is a solution, bankruptcy record is publicly searchable. So if 0:13:10.550 --> 0:13:12.200 you do not want to have record, do not take 0:13:12.200 --> 0:13:12.939 it lightly. 0:13:13.110 --> 0:13:15.100 It doesn't mean that I don't have to pay my debts, 0:13:15.110 --> 0:13:18.120 I still have to pay. It's just that because I'm 0:13:18.120 --> 0:13:20.740 not able to pay under the standard terms and conditions, 0:13:20.750 --> 0:13:23.610 I will be probably asked to pay a fraction of 0:13:23.610 --> 0:13:26.390 it as a bankrupt. I do have to be mindful. 0:13:26.400 --> 0:13:30.900 For example, I can't travel without first getting permission and 0:13:30.900 --> 0:13:34.380 for some people depending on their professions, it could become 0:13:34.390 --> 0:13:35.670 a hindrance ba 0:13:35.684 --> 0:13:38.054 because I may not get my license renewed if I 0:13:38.054 --> 0:13:41.865 am a bankrupt. So they're our responsibility expected of a 0:13:41.865 --> 0:13:47.145 bankrupt on top of making the money contribution and target contribution. 0:13:47.155 --> 0:13:50.705 In order for me to get this charge with record removed. 0:13:50.715 --> 0:13:53.434 What's the worst that can happen if you try to 0:13:53.434 --> 0:13:57.635 just escape your debt or not handle it as you 0:13:57.635 --> 0:14:00.880 should. Of course you're dead size will get bigger 0:14:01.120 --> 0:14:04.840 to the extent that the creditors probably will also take 0:14:04.840 --> 0:14:09.490 legal action against the person which could be rich or 0:14:09.490 --> 0:14:13.440 seizure and sale someone will go to the house of 0:14:13.440 --> 0:14:19.229 the borrower place. Tickles on the items that have been seized. 0:14:19.560 --> 0:14:21.970 Of course you cannot remove those items because it's been 0:14:21.970 --> 0:14:26.650 seized right. If no payment arrangement is being made monday, 0:14:26.650 --> 0:14:30.180 the Ganga ni men secondhand goods buyers will go to 0:14:30.180 --> 0:14:33.780 the house together with the Bay leaf the auction to 0:14:33.780 --> 0:14:36.950 sell away the items. Yeah, they have the right to 0:14:36.950 --> 0:14:40.510 sell away. It could be very traumatizing because this is 0:14:40.510 --> 0:14:43.720 done at the home. Yeah. If you've got neighbors, it's 0:14:43.720 --> 0:14:46.330 possible that your neighbors be seed. If you do not 0:14:46.330 --> 0:14:47.970 want to face that type of situation 0:14:48.170 --> 0:14:51.020 then I think the person should try to make arrangements 0:14:51.020 --> 0:14:53.450 to repay the creditors so that the credits will take 0:14:53.460 --> 0:14:56.920 this action. The other possible action is to sue the 0:14:56.920 --> 0:15:01.600 person bankrupt for people who are bankrupted. We have launched 0:15:01.610 --> 0:15:05.620 a new service, a support programs for the bankrupt and 0:15:05.620 --> 0:15:09.910 their families. It is what we call the bankruptcy rehabilitation program. 0:15:09.920 --> 0:15:13.140 We will help them to draw up a money budget 0:15:13.150 --> 0:15:16.320 that helped them to meet their money contribution and target 0:15:16.320 --> 0:15:17.090 contribution 0:15:17.260 --> 0:15:20.370 so that if they meet their M. C. T. C. 0:15:20.380 --> 0:15:24.060 They can see themselves getting discharged and having their record 0:15:24.060 --> 0:15:28.170 removed from publicly searchable records. People with a money issue 0:15:28.180 --> 0:15:30.330 whether bankrupt or not. They have a lot of stress 0:15:30.340 --> 0:15:34.650 especially the bankrupt newly bankrupted individuals. There's probably a lot 0:15:34.650 --> 0:15:37.990 of emotional turmoil and relationship issues. So we have talks 0:15:37.990 --> 0:15:41.330 that teach people how to better manage their relationship problem, 0:15:41.340 --> 0:15:44.820 their mental stress and psychological stress. And we have a 0:15:44.820 --> 0:15:45.340 unit 0:15:45.550 --> 0:15:48.470 they can talk to the bankrupts and the backups family 0:15:48.480 --> 0:15:51.230 to ascertain what are their other needs so that we 0:15:51.230 --> 0:15:54.110 can do referral for them to seek help from other 0:15:54.120 --> 0:15:55.560 agencies and 0:15:55.560 --> 0:15:57.470 then they can get out of it too. That's the 0:15:57.470 --> 0:16:01.630 hope and get out of it and get the bankruptcy 0:16:01.640 --> 0:16:06.790 record remove from publicly searchable records. 0:16:07.170 --> 0:16:12.790 What if it's your friend or your family member that's 0:16:12.800 --> 0:16:15.890 in a debt problem, maybe not you, but what can 0:16:15.890 --> 0:16:20.680 you do to help other people? Sometimes they realize the situation. 0:16:20.680 --> 0:16:22.290 Sometimes they don't. 0:16:22.300 --> 0:16:24.850 If you know of a friend who actually in debt 0:16:24.860 --> 0:16:29.300 but he is in denial, which often times that's what happened. 0:16:29.310 --> 0:16:32.360 I have family members calling us. Can you please help 0:16:32.360 --> 0:16:33.770 my so and so 0:16:34.070 --> 0:16:36.060 we say that we can't help him unless you want 0:16:36.060 --> 0:16:39.460 to be helped you because the debt is under his name. 0:16:39.470 --> 0:16:42.260 No one can do anything. Of course you can help 0:16:42.260 --> 0:16:44.700 him to pay. But we all know it's not helping 0:16:44.710 --> 0:16:47.610 because once you help him to pay, chances are again, 0:16:47.610 --> 0:16:50.050 based on our experience is that people who get into 0:16:50.050 --> 0:16:53.550 debt again because their families help them to pay. Right. 0:16:53.560 --> 0:16:57.160 And sometimes the family members is actually in no financial 0:16:57.160 --> 0:16:59.760 position to help. So the family members go and borrow 0:16:59.770 --> 0:17:02.720 that is even worse. So now there's not just one 0:17:02.720 --> 0:17:03.800 person in that, but 0:17:04.200 --> 0:17:07.790 two persons are in debt. Even if the family members 0:17:07.790 --> 0:17:12.149 has got financial capacity to help during speaking the person 0:17:12.160 --> 0:17:16.189 in that many times, they don't learn from this experience. 0:17:16.200 --> 0:17:18.950 Very likely they will get into trouble again. So there's 0:17:18.950 --> 0:17:21.510 no end to it. Of course you can talk to 0:17:21.510 --> 0:17:24.600 the person make some agreements. It's not going to be easy. 0:17:24.609 --> 0:17:26.980 I can imagine it must be really tough because first 0:17:26.980 --> 0:17:27.530 of all, 0:17:27.760 --> 0:17:31.450 the doctor is in denial. The person can get angry 0:17:31.460 --> 0:17:35.090 and not cooperative. So being a friend of being a 0:17:35.100 --> 0:17:37.830 family member really have to be very patient 0:17:37.840 --> 0:17:43.350 if you're someone who's vulnerable or easily tempted to borrow 0:17:43.350 --> 0:17:45.930 or use credit cards and take up loans. Is the 0:17:45.930 --> 0:17:49.650 solution just using cash and not taking up 0:17:49.830 --> 0:17:52.010 any that as much as possible? 0:17:52.020 --> 0:17:54.740 Yes, I would say so. If the person is really 0:17:54.740 --> 0:18:00.420 very what they call impulsive, compulsive to make purchases frankly speaking, 0:18:00.430 --> 0:18:03.840 I don't have any credit cards because if you don't 0:18:03.840 --> 0:18:06.890 have the cuts with you, you can buy things that 0:18:06.900 --> 0:18:10.040 you don't have cash to purchase. And the worst scenario 0:18:10.040 --> 0:18:13.590 is that you use up your savings because you still 0:18:13.590 --> 0:18:14.940 have your debit card, right? 0:18:15.150 --> 0:18:18.680 But at least you don't have a credit issue. Of course, 0:18:18.690 --> 0:18:20.550 you still have to find a way to see how 0:18:20.550 --> 0:18:23.640 to leave the balance day until you get your next paycheck. 0:18:23.650 --> 0:18:26.500 But I think that is still in a way smaller 0:18:26.500 --> 0:18:31.389 problem to address then having $10,000 credit card bill outstanding 0:18:31.400 --> 0:18:32.270 to address. 0:18:32.280 --> 0:18:35.210 Some say that not all that is bad, that there's 0:18:35.210 --> 0:18:38.219 good debt and bad debt. How do you know the 0:18:38.220 --> 0:18:39.080 difference 0:18:39.090 --> 0:18:41.070 something is that that's 0:18:41.380 --> 0:18:45.719 that you take on can help generate income or build 0:18:45.730 --> 0:18:48.950 human capital. I take a loan when I graduate. I 0:18:48.960 --> 0:18:53.250 more or I take a loan, invest in a property 0:18:53.250 --> 0:18:55.930 that can generate rental income. We still have to be 0:18:55.930 --> 0:18:59.880 careful mindful about how much that to take. No doubt 0:18:59.890 --> 0:19:02.919 there is potential but I still have to think of 0:19:02.930 --> 0:19:05.210 am I able to service? I think that is still 0:19:05.210 --> 0:19:08.129 a very important question to answer. Before we apply for 0:19:08.140 --> 0:19:09.130 a loan. 0:19:09.280 --> 0:19:11.320 There are things to consider to make it simple. We 0:19:11.320 --> 0:19:15.040 call it P A. O. P. Stand for purpose. So 0:19:15.040 --> 0:19:17.340 what is the purpose of taking on this loan? Do 0:19:17.340 --> 0:19:19.750 I really need to buy that? And must I really 0:19:19.750 --> 0:19:23.060 by now assuming it is a mass for example I 0:19:23.060 --> 0:19:26.540 am a freelancer and my work requires me to have 0:19:26.540 --> 0:19:30.270 a computer and my computer broke down. Of course computer 0:19:30.270 --> 0:19:32.469 is my tool of trade so I need to buy 0:19:32.480 --> 0:19:35.640 at least I know why I'm taking on installment to 0:19:35.640 --> 0:19:36.790 purchase the computer 0:19:37.000 --> 0:19:41.680 Then the second question. Power right. A is affordability. So 0:19:41.680 --> 0:19:43.880 the question is how much can I afford to service 0:19:43.880 --> 0:19:47.270 the money installment for this computer? So I need to 0:19:47.270 --> 0:19:49.130 stop take what is by cash flow, what is by 0:19:49.140 --> 0:19:54.030 earning assuming my capacity to service the installment payment is 0:19:54.040 --> 0:19:56.139 maybe $150 per month. 0:19:56.810 --> 0:20:00.290 That is my capacity to service then if my computer 0:20:00.300 --> 0:20:03.660 is going to cost $150 money installment to pay over 0:20:03.660 --> 0:20:06.420 the next 12 months then. Okay, not too bad. So 0:20:06.420 --> 0:20:10.060 don't go and buy a $4,000 computer right, because that 0:20:10.060 --> 0:20:13.400 will be beyond my servicing capacity already unless I can 0:20:13.400 --> 0:20:14.419 find a way 0:20:14.770 --> 0:20:19.540 to reduce my other expenses then all is option. Now 0:20:19.540 --> 0:20:22.740 the question is, are there other options to taking up 0:20:22.750 --> 0:20:26.490 a new loan? For example, let's say a father promised 0:20:26.490 --> 0:20:28.580 the sun if you do well in the exams, I'm 0:20:28.580 --> 0:20:30.239 going to let you have a dog. 0:20:30.470 --> 0:20:34.340 The father also promised the mother the wife we go holiday, 0:20:34.350 --> 0:20:38.010 you know because now I can travel but the amount 0:20:38.010 --> 0:20:40.170 he has may not be able to go for holiday 0:20:40.170 --> 0:20:41.750 and still buy a dog. As you know. Nowadays, the 0:20:41.750 --> 0:20:46.150 dog easily cost 8000 to $10,000 easily. And the holiday 0:20:46.150 --> 0:20:49.780