TOUGH TIMES

Borrowers play hide and seek with creditors as Covid-19 bites

Nakuru traders face tough times as debts pile

In Summary

•Hiding from creditors cannot resolve a financial problem, instead, it annoys lenders

•The moment one falls into debt, they should update their creditors on their situation and agree on a payment plan.

Some traders in Nakuru have now been forced  play hide and seek with creditors due to reduced business occasioned by the impact of Covid-19 

            The Nakuru Small and Medium-Sized Enterprise (SMEs) chairman Johnston Ndegwa said a number of his members have devised  ways of avoiding their creditors.

He said they are hardly making any sales due to suppressed economic activities, worsened by the stay at home orders. 

            Ndegwa said while  borrowing is a way of life and occasionally people get caught in runaway debts but  when that happens people  cope differently.

 

With some run away from creditors, others borrow to repay older debts yet others switch off their mobile phones and try as much as they can to remain invisible. 

           However, Ndegwa said due to these lean times, it’s possible to have multiple creditors.

“Managing these kinds of debts is not easy, but with careful planning, you can come up with a better way of dealing with your creditors,’’ he advised.

 He says the moment one falls into debt, they should update their creditors on their situation and agree on a payment plan.

           Ndegwa says that avoiding or hiding from creditors cannot resolve a financial problems, instead, it annoys lenders, who then start speculating the ill motives of absconding. 

Ndegwa advised SMEs to prioritise the repayment of debts that attract the highest interest or penalties such as bank loans because the consequences of not repaying them can be dire to the survival of their business.  

            He urged SMEs with bank loans, to book an appointment with the manager and explain their situation, and where possible to try and renegotiate the repayment period and ask for more time. 

             Ndegwa emphasized on the importance of drawing up a budget during these financially lean times to act as a guide, by listing earnings and all other expenses, to make it easier to identify the amount that can be spared for loan repayments. 

            A financial expert and trainer in Nakuru town, Peter Kimani, says when a person fails to keep in touch with their creditor, the impression they create is that they are unwilling to repay their debts or simply do not care.

 But when a creditor keeps in touch with the people they owe money, they create confidence with the people or institutions they have borrowed from. 

               “Never decline to take calls from your creditor. When they write to you, file the letters and where necessary, reply to them and explain your situation. Failure to do this is discourteous and your creditors can take stern action,’’ says Kimani.

 

            He advised those who are already in debt to start by preparing a schedule of all the people or the institutions they owe money, indicate how much is due to each of them and come up with an arrangement on how the money will be repaid.

            “You can start repaying the oldest debts or that owed to the most uncooperative creditor. The other option is by distributing payments across the board. You can pay an equal percentage of each debt or just assign a standard amount for all the cases,’’ he adds. 

  However, Kimani says if the creditors handover a case to debt collectors, one should not over commit themselves. and that if the matter ends up in court you should seek help from experts.