Dubai resident earns Dh33k a month, has Dh1 million debt

I owe Dh630,000 on a personal loan and have six credit cards with a total outstanding balance of Dh420,000. My monthly salary is about Dh33,000 and so far I have never defaulted on a payment. I have contacted a few debt management companies but I can't find a reliable one. I know debt management companies are not popular in this region, so what solution do you suggest? SL, Dubai

Expert one

Preeti Bhambri, managing director of

There are three banks that offer a debt consolidation loan in the UAE – Abu Dhabi Islamic Bank (ADIB), Emirates Islamic and Dubai Islamic Bank. All three are Sharia-compliant and ADIB offers an attractive programme with no processing fee and the first instalment due after 90 days. Emirates Islamic offers loans starting at just 2.99 per cent per annum.

However, for SL, the maximum loan that can be given is Dh750,000 for which the EMI will be around Dh16,500.

Instead, SL could sell off his assets and bring down the total outstanding to Dh700,000 then apply for a debt consolidation loan. Alternatively, he could sign up for an equity release loan if he owns a property. That will be available at a much lower rate than a personal loan.

A balance transfer between credit cards could also provide temporary relief, but to really resolve this situation he needs to reduce the loan to a Dh700,000 level and apply for debt consolidation. SL should note that Sharia-compliant banks cannot take over other Islamic debts, so he needs to repay any Islamic credit cards or loans first.

Expert two

Jon Richards, chief executive of

Asking for help is the best thing to do. Financial stress can severely affect both your personal and professional life, so making a plan of action will not only have a positive effect on your bank account, but on your life in general. Here are some tips:

Don't miss payments

It’s vital to stay in control of loan and credit card payments. Missing payments leads to fees and charges and causes debt to spiral further out of control. Also, all missed payments (and/or any bouncing cheques) are logged on your credit report and will end up affecting your ability to get a loan, other credit cards and possibly a mortgage. With the launch of Al Etihad Credit Bureau this year, every aspect of your financial history is tracked.


Consolidating your debt is an option to seriously consider. One payment a month is easier to manage than many. A consolidating loan would mean you close your loan and credit cards and combine all of your debt into one single loan.

Money saving apps

Smartphone apps such as Wally, Tosh Finance or Daily Budget Original are all easy ways to keep track of what you’re spending.

Downsize your accommodation

Downsizing or moving to a cheaper area will drastically ease your finances. Set yourself a budget.

Save money at home

Look at ways to save at home. Be sensible with grocery shopping, go to an affordable supermarket and stock up on ingredients so you can make food for the week. Save energy at home by turning lights off and using the washing machine only when you’ve got a full load.

Cut back a bit

Until you are back on track, avoid expensive socialising, eating out and travel. There are numerous free activities on offer, take advantage of them and look for offers and discounts. Many venues have two-for-one deals.

Next Money Clinic:

I want to take out home insurance to protect the contents of my rented villa but very few people I know here seem to have it. What should I look for in a policy and what is actually covered in the UAE? MN, Dubai

Every three weeks The National features a reader’s personal finance problem. If you have an issue or would like to suggest a solution for another reader’s concern, write to

The advice provided in our columns does not constitute legal advice and is provided for information only. Readers are encouraged to seek appropriate independent legal advice.

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