I was a UAE resident for six years and studied in Dubai. Everything was going great until a few years ago when I started handling the family business, a stone trading company. The company was set up by my father and brother and I was just a kid learning the ropes and helping out after college hours. A few loans and credit cards were taken in my name on behalf of the company. Then there was a sudden loss in the business and my family I started facing problems, so I went to India in August 2015 and have not been able to return because of these issues. In total I owe Dh112,300 on credit cards and loans to four different banks. I do not have enough to settle this once and for all. I am waiting for my business to flourish here, and hoping it will pay off asap. I have also tried to have a side income so that I can contribute as much as possible. But the banks are harassing me. They have sent messages to my Facebook friends saying I ran away and have hired a loan recovery company in India who calls and abuses me. I want to pay the amounts as soon as possible. What do you advise? DC, India
Debt panellist 1: Rasheda Khatun Khan, a wealth and wellness planner
Why do we have a system where there appears to be no way to repay and recover? We are seeing an alarming number of residents trapped in this circle where the debt has already risen to an unaffordable amount; they are unable to consolidate into a loan with the banks and have several judgments and/or threatening calls from these banks.
The first point of call has to be to find a debt consolidation company. There are a couple of options in the UAE, such as Lotus Loans and Overdues Rescheduling Services, but also try companies in India. These organisations will negotiate a settlement with the bank and some also offer the loan facility. They take on the outstanding debt and then have a repayment schedule with you. Call as many companies and see the options on offer. Be sure to understand your new agreement and the charges associated.
Alternatively, write to each bank with a request to repay them in instalments. If you have any amounts you can pay as a partial lump sum, then do so. Explain your situation and make an offer of what you can repay on a monthly basis. Let them know, even though you are not in the country, that you are still prepared to repay your loans and that you need their help to do so, unlike many who simply choose to abscond. On a separate note, reach out to the bank managers of the banks that are making public threats on your Facebook page. Take a snapshot of the threats and send to them. Sometimes the banks are not aware this is happening. Unfortunately “scare” tactics are often used, many of which may not even be legal.
Continue to focus your efforts on earning income; the more you earn the quicker you will be able to get back on your feet. Cut down on your expenses as much as you can and downsize where possible. Call on friends and family for financial support as well as emotional support. Financial distress is one of the quickest ways of creating illness in the body. Taking care of your mind, body and soul is also imperative. In the end it is your physical ability that will see you through.
Debt panellist 2: Philip King, head of retail banking, UAE for Abu Dhabi Islamic Bank
The most important thing is that you open a dialogue with the banks to which you owe money. By being transparent and forthcoming about your sources of income and intentions to pay back the loans, you can create a payment plan with the banks that suits all parties.
It is important to understand that from the point of view of the bank, they would like to close the case as soon and as amicably as possible – deferring to a loan recovery company is a last resort for a bank who has not had sufficient contact from the debtor. Therefore the bank would welcome your contact and will work with you to create a plan to pay back the loans.
When sharing liabilities between multiple banks it can be difficult to negotiate affordable plans with all of them as different banks have different rules while dealing with such situations. Since you do intend to repay the loan but do not reside in the UAE, it is recommended that you contact your bank/s and agree a settlement plan, which may include debt consolidation or restructuring of the loan.
As a general rule cards should never be used to finance a business or any assets. The rates are very high on cards and thus they are meant to be used for everyday purchases as an alternative to cash. They should be paid immediately.
The Debt Panel brings together four financial experts: Philip King, the head of retail banking in the UAE 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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