Debt-Relief Plan for Recovery Team of Microfinance Institution
Tunde Raji - February 3, 2018

The current global economic recession with special emphasis on Nigeria economy has enormous effect on Debt and Debt Management. This call for concern so that everyone will not be trapped continually in this present humongous, and debt-induced economy. Debt is no respecter of persons as it cut across board: individuals, corporate, national, and international.


My subject of concern is how microfinance institutions as a corporate body can help or assist the loan-defaulting clients to be Debt free and Stress-free through intermittent free professional Debt management advice.
Every microfinance institutions should deem it fit to come up with Debt Relief Plans for defaulting clients to becoming Debt-free. This can be achieved in two ways: firstly, through a ‘Debt Help’ newsletter to the educated loan defaulting clients. Secondly, through word of mouth to the uneducated loan defaulting clients. The purpose of the Debt Relief Plan is to inform the Delinquents and Bad loan Clients of the need to incur less expenditure and track all monies spent while in debt.


Moreover, all loan defaulting clients should put up a budget formation and sustain it. It is just a listing of their monthly income and a listing of their monthly expenses. At the end of every month, loan defaulting customers should deduct the monthly total expenses from monthly total income. If the variance or the net balances are positive figures, the defaulting loan customer is on the right pathway to becoming Debt-free. In contrast, if the variance or the net balance is negative, such defaulting customer need to cut the expenses deeper in order to achieve positive results.


In addition, the positive net balances or money realized from the customer should be set aside monthly to service the Delinquent or Bad loan. Loan defaulters can even be professionally advised to sell off all unwanted but valuable properties such as extra car, and many more to service debt. Loan defaulters can also be professionally advised to find ways of making extra money to increase their income. This will have positive effect on their net balances.


In conclusion, Debt Recovery Team must educate loan defaulters of the need to be disciplined and consistent in paying off the outstanding debts from the net balances of their monthly Cashflow/budget. Loan defaulting customers need to develop thick skin and stiffed-neck on their road map to becoming Debt-free.


Photo Credit: Nick Youngson




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