'There have been many cases where clients have indicated that they feel suicidal as they feel they have no other options to deal with their financial hardship.'
Illustration: Dominic Xavier/Rediff.com
Debt is a problem we all deal with in one way or the other. Sometimes our debts take over our lives and we begin to sink in them. Finally we reach a stage where we cannot pay back in time.
Some people brazen it out while others contemplate the extreme measure of taking their own lives.
Now we have a debt management company which takes over all your debts, speaks to your creditors, arranges an EMI that you can manage within your income and, as far as you are concerned, it is completely free.
The company makes its money by making your creditors pay for collecting money from you and giving it to them.
Harish Parmar has been running Singledebt, a debt management company in the United Kingdom, for 30 years. He set up business in India in December 2018.
"Currently we have a team of around 30 staff, comprising a legal team of professional lawyers, para-legals, financial advisors. We also have a chamber of barristers that advises us on legal points. We also have a firm of certified accountants that manages all the payments to the creditors," Parmar, below, says of his India operation.
"The only thing we have brought over from the UK is the concept of debt management and our expertise in this field," he tells Rediff.com's A Ganesh Nadar.
You have been in India for two months, how many calls for help have you received? How many of these have been suicidal?
Approximately 12,500 calls have been received.
Many of the clients were very distressed, mainly due to the harassment by the collection agencies and the creditors.
There have been many cases where clients have indicated that they feel suicidal as they feel they have no other options to deal with their financial hardship.
To date, it is public knowledge that these suicidal thoughts are present as a result of the type of pressures the collection agencies and creditors apply to debtors.
What is the difference between the calls you get in the UK and the ones in India?
The difference in the calls received in the UK and that of here in India is that the customers here are not aware of their legal rights.
They are not fully educated on financial products and financial management, which in turn causes a greater problem, and that is the number of creditors each customer is indebted to.
Customers in India have over double the number of creditors than that of the UK.
On an average, customers in India have in excess of six creditors, whereas in the UK the average is two creditors.
The financial market in India is not as mature as the market in the UK, but due to the population of the market the sector in India is huge.
This is contributing to a major problem in the economy, where the customer is in more debt than they can possibly afford. And so the customers in India are generally more distressed with their circumstance.
After the initial call, what do you do next?
Once we have a clear understanding of the client's financial circumstance, we will advise the client of the options available.
Your Web site mentions that you don't take any upfront fees. Does that mean that you charge later?
We do not charge anything for the initial advice. Whether the client comes on board, it is up to them.
Our fees are only applied if the client comes on board the repayment plan.
You take charge of the payback, how much of that do you retain as your fees?
Our management fee is 12.5% of the reduced monthly EMI.
How is your organisation funded?
The organisation is self-funded by the promoters.
Is your telephone manned all 24 hours?
No, our phones are not manned all 24 hours. Our working hours are 9 am to 8 pm, Monday to Saturday.
You have also a chat window on the Internet, is that manned 24 hours?
Our chat window is manned during our working hours 9 am to 8 pm, Monday to Saturday.
Though you project yourself as a social service organisation, it actually looks like a company doing business.
We are a commercial enterprise, where we deal with consumer debt issues, harassment cases and other illegal practices from creditors. This is all handled in-house.
Our infrastructure is such that we employ trained professionals to advise and offer our services.
We are providing a service to the public for its benefit, and for this we charge a fee which is based on the client's affordability and so not to put the client in further hardship.
It also looks like a back-door entry for British lawyers into the Indian system.
There is no back-door entry for British lawyers into the Indian judicial system.
All of our lawyers are Indian nationals, our legal advisors are barristers based in Mumbai.
The only thing we have brought over from the UK is the concept of debt management and our expertise in this field.
At any given moment, you may be in possession of funds belonging to clients. What is the security people have who trust you with their money?
We are transparent with the customer regarding the funds we manage for them.
We have a dedicated client account that is managed by a reputable third party, and in this case a large firm of accountants.
We also update the client on a monthly basis, in respect to the funds that are distributed.
Our clients also have access to their debt management account via an online portal to see exactly where their funds have been distributed.
What are your assets in India?
We have invested Rs 1 crore in developing this business and there is ongoing investment in training, in software and efficiency.
Do you have a licence to manage other people's money?
Currently, there is no license required, however we are in the process of speaking to regulatory bodies with respect to protecting the general public and to introduce licensing this activity to promote good business practice as per the guidelines set out in the UK.
Could you give me three examples of your intervention in India?
We have come across many cases where the debtor has a high debt ratio in comparison to their EMI (total monthly expenditure divided by total monthly income x 100 = % ratio)
There is prima facie evidence that the creditors have mis-sold the line of credit and have acted irresponsibly in authorising these loans and credit cards.
The results of the creditor's actions has impacted the debtor in such a way that the debtor will inevitably default on the line of credit and will remain in the debt for the foreseeable future.
The interest and charges that are applied as a result of the default would make the debt unmanageable for the debtor and so collection agencies are appointed by the creditors to apply undue pressure of any means to recover the outstanding balance.
The harassment from the collection agencies is very aggressive.
They have been known to disclose personal and confidential information to third parties including family, friends, relatives, employers, employees and the surrounding community to apply pressure on the debtor to pay.
As embarrassing as these situations can be for the debtor, it also causes major stress and anxiety for the debtor and the family.
We have assisted in helping such clients and have filed many NCs and FIRs against the creditors.
This has stopped the harassment from collection agencies and has allowed the debtor to regain control of their finances in order to repay their outstanding debt.
This is also due to the fact that we negotiate with the creditors a suitable repayment plan that the debtor can realistically afford.