The Debt Panel: 'Will I be stopped at the airport over an unpaid credit card bill?'

The Dubai resident, from the Philippines, is concerned the debt will jeopardise her plans to emigrate to Australia

Illustration by Mathew Kurian

Will immigration stop me at the airport if I have unpaid debts on my credit card? I have resigned from my job in Dubai working for a painting company because I am planning to move to Australia in the coming weeks.

I cannot pay off the entire outstanding amount before I go, which is why I plan to relocate and then continue payments from there. However, I am afraid immigration may stop me when I try to leave.

My only debt is a credit card on which I owe Dh18,000. I ran up the debt to help my brother who took a Dh7,400 cash loan on the card to pay his rent.

My gratuity will not be enough to clear this debt and I really need that sum to send money back to my family in the Philippines to help meet their expenses there.

I signed up for the card in 2018 and until recently I was paying off the card every month. However, since my brother took that cash loan I have only been paying the minimum due each month.

I earn Dh5,000, but in Australia I will be looking for a new job. My husband is already working there earning A$2,500 (Dh6,164) a month. I plan to keep my bank account open when I leave the country. I have already approached the bank and was told it was not possible to close my account because of my outstanding credit card balance. They said it must also stay open even if I migrate to another country and pay the balance off from there.

My expenses in Dubai for transport, groceries, utilities, remittances and housing costs in the Philippines come to Dh3,500. My brother is also trying to give me whatever he can to repay the debt as he has only just secured a new job. What is your advice? JS, Dubai

Debt panellist 1: Philip King, head of retail banking at Abu Dhabi Islamic Bank

Typically, banks have no issues being repaid from abroad as long as the borrower has a good track record of timely repayments, and has proven their ability and willingness to repay their debts in full. Therefore, it is important you inform your bank about your circumstances in order to reach a suitable repayment arrangement.

In terms of your end of service gratuity, banks usually mark this as a "final pay" and may use it to pay off your outstanding debt. They may also take additional measures to recover any remaining balances. To avoid this, it is vital to alert the bank about your plans to move to Australia.

Once you have reached a mutual agreement with your bank, it would be best to have it in writing. A formal clearance letter should support your eligibility to exit the country without being questioned at the immigration.

Debt panellist 2: Ambareen Musa, founder and chief executive of Souqalmal.com

While it is possible to repay your credit card debt from overseas, a bank may want you to settle the debt fully before leaving. This is simply because it is difficult for a bank in the UAE to ensure regular repayments and enforce their debt recovery measures when a borrower is based in another country.

Let's first understand what could go wrong if you were to try and leave with an unpaid credit card debt in the UAE. Since you have already resigned, your employer will soon be transferring your final salary and end of service benefits into your account. Once this transaction reflects in your account, the bank will be prompted to freeze the funds in the account. This measure is in place to deter borrowers from exiting the UAE and leaving their outstanding debts behind. The bank may also apply for a travel ban if it suspects you are likely to abscond without repaying your debt.

To avoid being embroiled in this situation, keep your bank in the loop. When it comes to relocation, it would be much easier to negotiate with the bank if you have secured a job overseas and can use the job offer letter as proof of your ability to keep up with your debt repayments from outside the UAE. However, not all banks may be willing to accept this arrangement, which is why you should be prepared for the bank to demand an immediate lump-sum settlement.

You could use your gratuity to partially repay the outstanding credit card balance, and negotiate with the bank to allow you to repay the rest gradually, once you move overseas.

Alternatively, you could tap into your savings and investments or rope in your family members to help you out with an interest-free loan to settle your credit card debt. The bank may even be willing to waive a portion of the interest or lower your settlement amount in return for a lump-sum payment.

Debt panellist 3: Keren Bobker, an independent financial adviser with Holborn Assets

It is unlikely you would be stopped by Immigration on leaving the country if your debt repayments are up to date. To put a travel plan in place, a bank has to make an application to the Court, making a case that a person is likely to leave without repaying debts. You have not been given any indication to this effect and say you have not missed a payment, plus the total owing is not a large sum compared to most.

Be aware that the bank is likely to use your final salary payment and gratuity to reduce the total outstanding. This is common practice and although you can request they don't do this, they do not have to follow your wishes.

No bank will allow you to close an account when money is owing. It will have to remain open and this gives you the means to continue making repayments. Normal practice is for it to be changed to a non-resident account and it can be closed once the outstanding debt is repaid in full.

If you are only making the minimum repayment each month, the amount owing will not be reducing as you are being charged interest. As you borrowed money for your brother, my view is that he needs to do all that he can to repay it. You are legally responsible, but he has a moral obligation to ensure you are not put in a difficult position. The interest rate on credit cards is high and it makes sense to repay the debt as soon as possible so you are not wasting more money on interest.

The Debt Panel is a weekly column to help readers tackle their debts more effectively. If you have a question for the panel, write to [e-mail]