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Thursday, 11 August 2016

So what if you go bankrupt?

My client was a bankrupt and a successful businessman.

Maybe I should rephrase that: He was a successful businessman, despite being a bankrupt. He ran exhibitions, and he had big, big shows. 

I met him up at a Starbucks. He bought me a frappucino. He handed me his file and said that he wanted to get out of bankruptcy ASAP. 

Lawyers always get to be the butt of jokes. Do you prefer to laugh with them or laugh at them?

I was surprised. He hadn't told me that he was a bankrupt. I asked him how life was, being a bankrupt and all.

"It was difficult for me, but we had a good life. We enjoyed the simple things in life." 

He was fortunate. He could hustle. He used his children's names and his wife's name to do business. He always described himself as a manager. "I'm building the business for my family. It's my family business." That's what he told others who did not know.

And the deals came, and he made money. But he felt no urgency to get out of bankruptcy. He was comfortable being a bankrupt.

Until the day came when he was invited to collaborate with someone outside the country. In this country, you get barred from flying at the airport if you are on the Immigration blacklist. Reasons for being blacklisted include bankruptcy, and tax avoidance.

Then he wanted to get out of bankruptcy, quick. He needed to go to a neighbouring country to close a deal. 

I got it done for him and he was happy. 

I was curious: Why so long? Why now? 

He told me that he always had his ways of dealing with people from overseas. There was email. There was Facetime. Skype was huge in those days. Fedex and DHL helped whenever he needed to send things over. And he preferred to arrange for people to come see him. He would pay for the hotel and the food. Most of them agreed to come over. 

And so I learned how a bankrupt person can continue to do business, successfully.

A lot of people fear bankruptcy.

They get sleepless nights just thinking about getting sued. 

My friend had signed a contract with a venue. It was a large venue for a large event. And then the venue owners came knocking. They wanted their deposit. Their deposit was in the hundreds of thousands. If the event didn't take off, they would have sued.

My friend was scared. We met them. "There will be financial consequences", said the manager, "I hope that we are on the same page. You signed."

We smiled politely. After that meeting my friend panicked. My friend didn't have the financial resources to pay nearly half a million. My friend wanted my support.

I said screw them. The contract specifically said that payment was needed to confirm the venue. 

And then I thought to myself, what's the worst that could happen?

My friend might get bankrupted. My friend's company might get wound up. 

To me, that wasn't serious. Because I know of bankrupts who do well in life. 

But my friend was aghast that I could even think of such a thing. "My name is my reputation. I can't do business like this."

My friend settled the deposit with the venue owner. The event was revamped to a smaller scale. The venue manager was happy that there was revenue. My friend was happy that the problem had been settled. It was a win-win.

And so I learned from my friend how to avoid bankruptcy: By negotiating before everything blows up. After it explodes, it's often too late to back paddle. 

Failures are in the past. Success is in the future. To connect the two, you have to work hard.

I had a client who retained his directorship despite becoming bankrupt.

He was the director of a company that he had invested in. Back then he had a whole lot of cash. He invested here, and he invested there. He became directors of a lot of places.

And then the day came when he became a bankrupt. It was expected. He told me that he had been young and foolish. He loaned money to friends. He spent money on women. Those who crowded near to him always wanted him to buy a round of drinks.

Eventually his debts became too much. He became bankrupted.

But somehow his directorship in one of the companies was not affected. He was still the director of one of his little investments.

And so he continued to do business. He didn't care that he was bankrupted. He was still a director, and he used it to the maximum to get business for the company. He made a deal with the owners so that they would pay him his salary in cash.

And eventually he got out of bankruptcy.

And so I learned that even with bankruptcy, you can continue to work hard. It's your attitude. If you continue to work hard as though nothing happened, you'll make the money and you'll get the funds to get out of bankruptcy.

I had a client who reinvented herself out of bankruptcy.

She was divorced with two kids. Her ex-husband was rich, and reputedly related to royalty. He was also a womanizer and an abuser. Her in-laws used black magic on her. Or so, she told me.

Eventually she could not take it anymore. She ran away and filed for divorce.

But in the meantime, she had signed bank guarantees. She stood in for her ex-husband's loans. He defaulted on most of them. She got sued and could not pay. She became bankrupt.

But life had to go on. With two young kids in tow, she worked hard. She met a nice man over the Internet. He flew in, met her, and fell in love. They got married. 

Her kids now have someone to call "Daddy". Her husband loves her and her children unconditionally.

I guess he probably fell for her cheerful ways. She has a way with words. She can tell you that everything is going to be all right. If it doesn't look like it will be all right, she'll go out on a limb for you. She does that for her friends. 

She considers me a friend, and I consider her a friend as well.

I learned that with a positive attitude, you can rebuild your life and hold on to the most important parts of your old life. 

Some of my friends are my teachers. I thank them for teaching me through their friendship.

The economy is always going from bad to worse.

It's the same complaint I hear every day: "Times are bad." People walk in to my office to meet me for a few minutes. I help them with whatever I can. And once in a while we have a decent conversation. 

I've heard people say that the economy is in trouble more times than I've heard them say the opposite. Maybe people are negative by nature. They are skeptical. The sky is always falling for them.

But sometimes they are right. Sometimes the economy does crash. Then all those prophets of doom suddenly become heroes. They were right all along. They know things that we don't. We should listen to them more.

So what if you lose your job in this slowing economy? I have some suggestions. Read them and think about what I wrote.

I used to think that the way to avoid financial ruin is by skimping on things. Cutting expenses whenever possible. Tightening your belt. Making do with less. 

But at the end of the day, I realised that there was a limit to how much I could scrimp and save. Perhaps I need to earn more. Perhaps making more money is the other thing that I should do while learning how to be frugal. 

I know that I will probably have more kids in the future. I have two at the moment. When that number becomes three, it's going to be tough. When it hits four, I might as well sell off my kidney to pay for my kids education. (Hopefully, they inherit some of my smarts so that they can get into the local government universities.)

And so I learned that frugality is most effective when it is accompanied by an increase in income. I'd love to learn how to increase my income. So please share your ideas with me.

Further reading.

Thanks for reading. Here are some other pieces from me: