In 2018, I took out a loan of Dh55,000 (14,976) for home renovations and to pay for my mother’s medical care. I regularly paid the monthly installments of 2,410 Dh until July 2020, when I lost my job due to the Covid-19 pandemic.
Since then, I have not been able to find a full-time job. I was able to work part-time for much less money but my visa expired three months ago and I haven’t worked since.
I was able to pay a lump sum of Dh5,000 for the loan and at the time there were only four payments left.
Now the bank says I owe 29,000 Dh on the loan. I also have a credit card with a limit of Dh20,000 but I now owe Dh37,885 on it due to accrued interest and late payment charges.
I explained my situation to the bank but they filed a complaint against me and the collection department is harassing me. They also call my sick mother in India.
I’m depressed and I don’t know what to do anymore. I stay with a friend because I can’t afford to pay rent or buy food because I have no income. Can you advise me on what to do? RR, Abu Dhabi
Debt Speaker 1: R Sivaram, Executive Vice President and Head of Retail Banking Products at Emirates NBD
It is unfortunate that you are faced with this difficulty and I sympathize with your situation.
Since you have accumulated considerable debt, I recommend that you contact a senior official at your bank and share all the details of your financial situation.
Ask for a revised, longer-term payment plan that will help you continue paying off the loan with lower monthly payments.
Since you are currently unemployed, you can also request a temporary payment holiday followed by a clear payment schedule that you would be able to meet.
Your bank may require supporting documents to assess your claim and if your repayment history has been good, they will most likely be flexible to come up with a mutually agreeable plan.
I want to emphasize that it is important that you obtain an agreement with the bank for the restructuring of your loan.
The bank may also ask you to surrender your credit card so that you stop racking up new debt while you consider settling your existing dues.
If you haven’t done so already, assess if there are any assets you can liquidate here in the UAE or at home that you can use to settle some of the amounts owed.
Although your monthly expenses may seem reasonable, please review them carefully to find ways to further minimize expenses through a good budgeting and spending plan.
A credit card can be a useful financial tool for easily managing your daily payments and transactions, accessing short-term credit, attractive shopping offers and discount programs, and earning rewards based on your expenses.
However, if credit card spending spirals out of control, it can lead to potential financial problems.
Paying only the minimum amount required each month is a common practice adopted by many cardholders.
Keep in mind, however, that this can lead to continued debt growth due to interest charges, leading to higher monthly payments and the threat of going into debt.
Debt collectors shouldn’t call your mom or family member to follow up on repayments, since they have your contact information.
I also suggest you bring this issue to your bank’s attention in writing and ask them to stop tracking your family.
If you continue to have problems with debt collectors, file a formal complaint with the bank and then with the Central Bank of the United Arab Emirates if the problem is still not resolved.
It is best to send this information by certified mail and keep a copy of your application for your records.
I wish you luck in coming to a good settlement plan with the bank and also in finding a new job soon.
Debt 2 Panelist: Jaya Ratnani, Managing Partner at Freed Financial Services
The pandemic has undoubtedly derailed many people’s financial plans and their ability to repay their debts on time.
Like you, many borrowers face the uncomfortable reality of missed payments and legal action against them.
This is naturally a very stressful position. However, the best thing to do in this situation is not to run and hide.
It is extremely important to always answer collection calls and not avoid them.
Most people avoid bank calls because they don’t know what to say. This leads the bank to assign the case to overseas collection agencies who will send representatives to visit your home and call your family.
You must be honest and explain your situation to the bank to find the best solution.
Unpaid debt over a period of time can grow into a monstrous sum as interest and penalties are added to the loan. However, there are options to help you through these tough times.
Depending on your current situation, the best possible solution is to talk to the bank and ask for a settlement plan.
In scenarios where the borrower has very limited means of payment, the bank may consider settling the debt for less than what is owed.
In such scenarios, if one can pay a single lump sum payment, it is possible to get a higher discount percentage.
If one cannot afford to arrange a lump sum, settlement can be done through a payment plan. However, the discount amount would be lower.
To commit to a payment plan solution, the bank should establish your ability to repay based on a fixed income source.
It would be advisable that you try to find a full-time job rather than working part-time for the banks to consider your application.
Until you find a job, you can ask friends and family for help in securing your payments. Once you have found a full-time job and are ready to take over the payments, you must notify the bank and release the guarantor.
Debt 3 Panelist: Alison Soltani, Founder of Leap savvy savers
I’m sorry to hear about your unfortunate situation.
I would first like to file a complaint with the bank for the harassment you suffered and the calls made to your mother in India.
Unless your mother has signed for the loan, she is not responsible for the debt and should not be contacted regarding the loan or credit card payment.
You can complain to the bank first and then to the UAE Central Bank if the bank does not resolve the issue within 30 days.
You can file a complaint by filling out the form on its website, by calling them on 800 22823 or in person at any of their branches in Dubai, Sharjah, Al Ain, Ras Al Khaimah or Fujairah. They can offer support and advice tailored to your situation.
The next issue to address is your income. The bank will be more sensitive to your case if you have evidence that you are trying to find a job.
I recommend applying for different industries and roles from your primary career and, in the meantime, trying to find different ways to make money.
Depending on your skills, you may be able to earn some money as a freelancer. For example, someone with a teaching degree could also work as a tutor, correcting exams, proofreading essays, or writing content.
There are many online platforms for freelancers to offer services, so try not to limit yourself to working for clients only in the UAE.
Be sure to use platforms such as LinkedIn and Indeed – upload your CV and network with others in your industry to discover opportunities.
Watch: Some of the stats behind the UAE hiring boom
The sooner you can start paying off the debt, even in small amounts, the better your chances of resolving the issue with the bank.
Finally, seek help for your growing debt. It may be worth contacting a lawyer and asking for more information to find out if the UAE financial insolvency law might apply to your case.
Like the declaration of bankruptcy, it offers protection to the debtor and establishes a negotiation between you and the creditor.
The court appoints trustees to carry out the proceedings and although you may be subject to certain conditions, such as not being able to apply for additional credit for three years, this may be a viable solution for you.
I hope you find gainful employment and solve debt problems very soon.
The Debt Panel is a weekly column to help readers manage their debts more effectively. If you have a question for the panel, write to [email protected]
Updated: October 05, 2022, 05:00