I work as cabin crew for an airline and I have debts of Dh350,000. I first took out a loan to buy a decent property in my home country of Tunisia. A few months later, some friends advised me to invest my money in forex. I made the transfers to the forex scheme, which turned out to be a Ponzi scheme. Then the company founders ran away. I have tried to reach them to no avail and the police say they can't take any action as this company isn't based in Dubai – it is based online. Lawyers in Dubai are asking for a huge amount of money to take on my case, which I don't think can be solved anyway as the scam happened online and these people can't be found anywhere. You may wonder how I could transfer this amount of money to people I don't know, but I had friends investing significant amounts with them and making profits so I did the same. I now have Dh230,000 left to pay back here and I'm paying a loan back home which will end in two years. I earn an average salary of Dh12,000 and Dh8,550 goes on the loan here and a further Dh2,500 back home. The debts are taking up my salary and if I take any leave, my income is less so I am not taking any holiday at the moment. I've shown bank staff here proof that I have been scammed and have asked for the interest rate to be reduced but the bank won't listen and I am getting depressed from working day and night to pay for my mistake. What do you suggest I do? MB, Dubai
Debt panellist 1: Keren Bobker, The National's On Your Side columnist and an independent financial adviser
There has been coverage in the local press, including The National, about forex scams and the simple fact is that if anything looks too good to be true it invariably is. A very harsh lesson has been learnt, that of doing due diligence before making any investment such as checking the legitimacy of the company, who regulates them and in what jurisdiction. In a case like this there is no come back and it is a case of "buyer beware". Investment advice should only be taken from a qualified and authorised professional and everyone should check who they deal with no matter how good anything may appear. From what I understand MB borrowed a substantial sum as a personal loan from a bank in the UAE. This sum was intended for the purchase of a property but instead the bulk if it was put into the Ponzi scheme, so it has been lost. The harsh reality is that the loss is not the responsibility of the bank and when the money was borrowed the loan should have been underwritten in accordance with UAE Central Bank guidelines that state that monthly repayments for all debts should not exceed 50 per cent of income. Has her income since been reduced?
If the loan was taken out for a relatively short period, it may be possible for the term to be extended so that the monthly repayments are reduced. Again, the total repayable each month must not exceed 50 per cent of income. If the bank is amenable to extending the term of the loan, MB needs to be aware that the total cost of the loan will increase over the full term, but it could reduce her monthly payments, which is her current priority and makes life a little easier right now. A bank is under no obligation to reduce an interest rate because of a customer’s mistake, and a polite and reasoned approach will invariably get the best result.
Are any family members able to assist? Does MB have any assets than can be sold to reduce the amount outstanding? Repayments need to be maintained and no other monies borrowed to avoid the severe consequences of defaulting on debt. All unnecessary spending needs to be curtailed until such time as the repayments become more comfortable. If another debt in Tunisia will be repaid in two years that should ease the situation, and two years isn’t that long. The circumstances are far from ideal and such scammers are truly despicable, but the legal responsibility for the UAE bank debts lie solely with MB.
Debt panellist 2: Rasheda Khatun Khan, a wealth and wellness coach
Losing money to an unregulated and/or fraudulent investment scheme is an unfortunate blow. Of course, they are set up to show payment and performance history, years of it even, giving new investors the confidence to place their own funds. But you must do your own due diligence before entering into any kind of investment. Here are some basic questions you should always ask before committing your hard-earned money: is the seller licensed? Is the investment registered? How do the risks compare with the potential rewards? Do I understand the investment? Where can I turn for help?
Many Ponzi schemes (an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors), share common characteristics. Look for warning signs such as unregistered investments, unlicensed sellers, high investment returns with little or no risk, overly consistent returns, complex strategies, issues with paperwork and difficulty receiving payments.
If you are aware of an investment opportunity that might be a Ponzi scheme, you should report it to the UAE governing bodies: the Securities And Commodities Authority and the UAE’s Central Bank.
MB may want to try approaching her bank again and asking for a term increase as they have declined to offer a lower interest rate. By stretching the term over a longer period, it will reduce the monthly commitment. First work out what comfortable monthly repayment you can actually afford to pay. You may also want to approach your employer to see if they can offer you a loan that can be repaid monthly directly from your salary. Also, revisit your monthly commitments and identify where you can cut back.
You could also consult an expert that may be able to help you structure your loans more effectively. Credit Expert, for example, will analyse your situation, obtain your credit report and advise on how to improve your current status as well as help you negotiate better interest rates or extended terms on your cards and loans. And Lotus Loans & Overdues Rescheduling Services offers help with debt counselling, restructuring and consolidation of liabilities for individuals and SMEs.
Having a plan in place will put you in a confident frame of mind. Use your depression as fuel to find a solution and always stay close to supportive family members and friends.
The Debt Panel brings together four financial experts: Jamal Alvi, the chief credit officer at Abu Dhabi Islamic Bank; Ambareen Musa, the founder and chief executive of the comparison website Souqalmal.com; Rasheda Khatun Khan, a wealth and wellness planner and founder of Design Your Life; and Keren Bobker, The National’s On Your Side columnist and an independent financial adviser with Holborn Assets in Dubai. Together they answer queries in a weekly online column to help readers better tackle their debts. If you have a question for the panel, write to pf@thenational.ae.
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