Father Sez

From and to parents - parental advice to our children on personal financial management and life.
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Posts Tagged ‘moral of borrowing’

What I have learned about the morals or the honour of borrowing

Wednesday, March 11th, 2009

My very first experience with “debt” was when my eldest brother helped me take a study loan to fund my University studies. I cannot remember the details of how we went about this, though my signature must have been required every step of the way. I suppose my brother must have wondered how on earth I would ever make it in life, much like I now wonder sometimes about my children…..hehe. 

When I graduated and started working, my brother would every month, without fail and like clockwork, take a bus, go to the office of the lending agency and pay the instalment. This was for a period of two years (tertiary education in Malaysia those days was cheap!) I can still remember him mentioning that almost all the staff there knew him because he was amongst the few (very few??) paying regularly. 

The point is, not paying or postponing an instalment never ever entered our minds. This mindset was something that somehow my parents had hammered into us from very young. 

I started working and my third job was with one fairly large group which was mired in debt. And one of my job functions was the so called restructuring of debt. You know, the normal formula, sell some assets, pay down some debt, conversion of bonds into equity, seek new repayment schedules on the other loans so that they could be met etc. 

One of my perks when I joined the company was a housing loan. The company took over a housing loan that I had with my previous employers. This was also during a period when our country was going through a tough time and basically my loan was under water. 

I got into the job with real gusto and soon realised that not everyone had the same mindset on the obligations taking on debt entailed. I was introduced into the world of using legal methods of holding creditors at bay and just dragging them along. And, boy, you could hold them off for quite a number of years. 

Then another transaction which the company had entered into about 3 months before I had joined exploded. In my view that transaction had been done to sort of screw some of the creditors but unfortunately the counter party screwed the company instead. Another legal front opened, alongside the many we already had with banks and other creditors.

As one can imagine, this “culture” clashed violently with all that I that held dear. I lasted about 5 months at that job. I left with a very sour taste in my mouth and a deep dislike for that company and its senior management. 

When I left, I was requested to repay the housing loan. As the loan was underwater, no way I could have refinanced the loan. But unfortunately for them the mortgage documents had gone missing! With God as my witness, I was never the custodian of the documents and I had nothing to do with their disappearance.

But I flatly refused to do anything to legitimise the loss and as a result they could do nothing. I just stayed in the house for 2 years without paying rental or loan instalments.  

About two years later, a new management took over that company. A representative came to see me to negotiate on the loan settlement. It took him about a minute to get me to agree to pay! All he did was to ask me, “Did I take the loan?” My answer was “Yes”. Then he replied “Then you must repay”. End of discussion.

It helped that this guy was a person I respected and he had nothing to do with the shady characters of the past management.  Still I could have just ignored him and this unfairly favourable state of affairs could have gone on for quite a while longer. I suppose they would need a court order to compel me to sign the documents allowing them to obtain a replacement copy of the title. And I had learned quite a bit about legal kung fu in my 5 months with them to delay this by another year or so. 

But in the end, what my parents had hammered into me prevailed, and I refinaced and repaid the loan.  

These events, which happened almost 2 decades ago, went through my mind when I read Brip Blap’s “Produce the Note”, and in particular this sentence…… We throw any concept of honor (i.e. paying one’s debts) out the window due to legalese, of course.  

Well, I am happy that I climbed out of the window and picked back my concept of honour. Though it was two years later!

   

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