Retiree in money trouble

QUESTION: I retired as a mathematics teacher a few years ago, and am now unemployed. I used up all my retirement package to put a new roof on an unfinished building, tile the kitchen, put in water tank, do some work on the kitchen, and bought a nice motor vehicle and put J$400,000 into Cash Plus.

To make matters worse, a church brother recommended World Wise Partners to me. I did not apply for the loan of J$400,000 which BNS offered me.

I put $210,000 as a start into World Wise, and then US$100, and US$200 some months. I even sold my motor vehicle and put half the money in World Wise until I had theoretically US$6,000 there.

I ran up credit-card debt to about J$200 000, because things were going well with collections from World Wise. That is why I built up my account at World Wise to pay off my debts. Mr Hall, sometimes I cannot eat well or sleep well as I fear going to debtor's jail. I am looking a job as I have three children.

I am still afraid of going to prison over the BNS debt. My car is 22 years old. Can the bank seize it, or my stove, fridge, or washing machine, although some of them are not in a good condition?

- DC

PFA: You have outlined an unfortunate chain of financial decisions which has left you very anxious. Your case, however, is not hopeless and you have taken an important step by asking for help.

Your case is not unique. It is so similar to that of many persons who receive a lump-sum as well as to that of many others who risk their money to make high returns without first determining if there is wisdom in taking the intended course.

By now, you would have learned that retirement funds are for retirement, though I sympathise with you for yielding to the urge to use a portion to complete the building your mentioned. You then bought a vehicle. Many persons yield to the desire to use a lump sum to realise some dream - to buy a vehicle, for example.

Managing a lump sum requires a solid plan. As you have discovered, a lump sum can vaporise before you realise what has happened.

Then, like so many other human beings, you decided you wanted to get-rich-quick by placing funds in two such schemes with money you borrowed and money you should have put aside for your retirement without considering the risk.

You then dug yourself into debt by accepting an unsolicited offer from the bank to borrow funds. It is flattering when such an offer comes, I suppose. Banks do all they can to make money.

Customers have a choice. They can accept or reject such offers.

credit-card debt

Although you mentioned that you built up your account in one of these schemes to pay off your debts, it seems your involvement in them is at the heart of your debt problem. You put borrowed money into one scheme and built up credit-card debt because the other was giving you good cash flow.

It is clear you are suffering physically and emotionally due to your present state of affairs and, from the portions of your correspondence I have not published, other areas of your life are under severe stress.

You indeed need a job; you have significant family responsibilities, and you will want to really retire one day, no doubt. The good thing is that you have taught mathematics and have a degree in economics. Have you considered teaching at a private school or offering private tuition?

Having a job is critical to your being able to reach an accommodation with your bank. To do so, you would need to see your personal banking officer who would be prepared to discuss various options with you.

If you fail to honour your obligations, it is likely you could face legal action.

The bank will not seize assets that have not been used to secure a loan. Credit-card debt is unsecured debt and, from what you have said about the other debt, I would not be surprised if it is unsecured.

Will you spend time in jail for your debts? If you allow legal action to be taken against you, the court will order you to pay, but it is not likely you will go behind bars. You must see your banker.

Oran A. Hall is principal author of 'The Handbook of Personal Financial Planning'. Email: finviser.jm@gmail.com