I was working in the UAE as a purchasing manager until December 2015. When I left I still had debts there but I continued to pay. Then a few months ago I had a road accident and I missed some payments, however I have already made up those defaults. I owe almost Dh200,000 on seven credit cards. I am willing to repay the debts, which is why I was paying off the minimum amount even when I was not in the UAE. Now I have been given a good offer in Saudi Arabia with a good package of Dh18,000 a month. But can I work in another GCC country if I owe money in the UAE? I am afraid I will be arrested if I land in any GCC country – though as far as I am aware there is no police case against me. And if the banks found out I was no longer in the UAE, would they force me to pay the full outstanding in one go? Also, is there any way I can get a settlement from outside the UAE – where I reduce my monthly instalment or fix it so that I don't pay the interest I am paying now? MA, Pakistan
Debt panellist 1: Philip King, head of retail banking, UAE for Abu Dhabi Islamic Bank
In practice, as long as you continue to meet your credit card payments in full and on time, your banks are unlikely to raise any issues, which is why you have managed to continue as a customer of these banks despite being out of work and outside of the country. Ethically, it is the responsibility of the borrower to transparently share his or her financial situation with the bank and try to work out a reasonable repayment plan. In some cases, this may include suspension of profit or waiver from the bank if a large portion of debt is paid. In any case, it is not appropriate to leave the debts without discussing possible relief or repayment options with the bank/s. So you must continue to make these payments and to steadily reduce your debt burden now that you have a new job. This is not necessarily easy when you are setting up in a new place, and are likely to have a temporary increase in costs. Having seven credit cards, at different banks, not only makes it complicated but also shows living beyond your means and incorrect borrowing (if cards are fully utilised). Moreover, in case of having liabilities with so many banks, it becomes difficult to negotiate affordable plans with all of them as different banks have different rules while dealing with such situations. Given the fact that you intend to pay but will not be residing in the UAE, it is recommended that you contact your bank/s and agree a settlement plan. We always recommend to borrow responsibly and only up to the amount that can be easily repaid. As a rule of thumb credit cards should be used as a transactional tool only rather than relying on it for excessive spending.
Debt panellist 2: Keren Bobker, The National's On Your Side columnist and an independent financial adviser
As MA is up to date with payments he should have options. If there is no police case against him there will be no issue in entering or leaving the UAE and a travel restriction for the UAE is not valid in other countries, so I see no reason why he should be prevented from entering Saudi Arabia. There is no standard agreement between the two countries when it comes to debt cases and only if a debt is extremely large is a bank likely to try to take any cross-border action, especially if a borrower is making all their payments.
Are the banks even aware that MA is no longer in the UAE? Their primary concern will be that regular repayments are being made, above and beyond anything else. Although it is often the case that a requirement in taking out a card is that someone is resident in the UAE, it is not uncommon for people to leave without having repaid a debt in full and the important thing is that ongoing payments are being made.
For peace of mind, MA may wish to check that there are no outstanding police cases although if payments are up to date I would think this unlikely. MA can ask a friend to take a copy of his passport to a major police station to check but I understand that the police are becoming more reluctant to provide information to a third party so there is no guarantee any information will be provided. An alternative is to hire a local advocate, a UAE registered criminal lawyer, to check on his behalf. There will be a fee for this professional service, in the region of Dh4,000 to Dh5,000, but if MA has no plans to enter the UAE he can simply request confirmation from the various lenders that payments are up to date and they have no issues.
Banks are unlikely to accept a reduced monthly payment and the only time they will generally accept a lower amount is if the total balance is to be repaid in one go. I have clients who have tried this approach recently and the discount for making a payment in full was not large. A bank will not suspend interest payments and if payments are missed the amount due will be added to the balance. Monies borrowed need to be repaid but making minimum payments will barely reduce the balance as it mainly pays off the interest. MA needs to make monthly payments in excess of the minimum to reduce the total balance and get the debts paid off. He says that his new job has a good salary so this presents an opportunity to get rid of the debts over the next few years.
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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