The Debt Panel: 'I have no job and owe Dh220,000 – should I apply for bankruptcy?'

Dubai resident has been dealing with criminal and civil cases over his debts

Banks are being highly encouraged to be flexible and understanding of customers’ circumstances, says Philip King, head of retail banking at Abu Dhabi Islamic Bank. Steven Castelluccia / The National
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Five months before the Covid-19 pandemic began last year, I lost my job and had to file a case against the company for not paying my end-of-service gratuity. Unfortunately, the case was delayed by 15 months because of the pandemic and there was an unexpected decision by the judge.

I have been unable to find another job despite trying my best. My debts are piling up and I have had three court cases filed against me for non-payment – one for my car loan in Ras Al Khaimah, a criminal case in Ajman and a civil case in Dubai.

In total, I have about Dh220,000 of debt, which includes interest and late fees. Because I can’t find a job, I have been unable to make regular payments and that is why I am in this situation.

The criminal case in Ajman was closed because I paid a Dh2,000 fine. For the Dubai case, I agreed to an unrealistic settlement, which included lawyers’ fees. I made three payments towards the settlement amount, but couldn’t afford to pay it any more. The police seized my car and the bank sold it to use against the loan.

With the financial help of friends, I had to send my wife and baby daughter home. Since leaving the UAE, my daughter has become sick and is losing weight. The doctors are worried it is psychological as I am not with them.

Recently, I received a call from the bank’s legal department asking me to pay Dh4,000 within 10 days or they will restart the civil case against me.

I don’t have the money and don’t know what to do any more. I have lived here for 18 years and if I had a job, I could pay these debts and bring my wife and daughter home so we can be together again. What options do I have? Is bankruptcy a possibility or something you would advise against? LH, Dubai

Debt panellist 1: Hazem Balbaa, associate at BSA Ahmad Bin Hezeem & Associates

Given the country’s great interest in protecting creditors’ rights, the UAE recently amended the Insolvency Law. The Insolvency Law only applies to individuals, while the Bankruptcy Law applies to companies and establishments.

The Insolvency Law provides debtors two options to assist them in settling their outstanding debts.

The first option is for the debtor to submit to the court a request to open settlement proceedings to settle the outstanding amounts. The court will study the debtor’s request and has complete discretion to either accept or reject the request.

If the court accepts the request, it will appoint an expert to study the financial status of the debtor and come up with a suitable plan to pay the debts that also has to be approved by the creditors. This route paves the way to a moratorium on actions by creditors applying to seize any of the debtor’s assets.

It is also in their best interest that you do not default on your debts as this could have considerable impact on their financial books.
Philip King, head of retail banking at Abu Dhabi Islamic Bank

The second option is for the debtor to declare they are insolvent. This route is only available if the debtor stopped paying for a period of time that exceeds 65 consecutive days and the amounts owed are greater than Dh250,000.

This route places a suspension on all legal and judicial enforcement proceedings against the debtor, as well as all criminal proceedings arising from bounced cheques.

It is also worth mentioning that liquidation will result in barring the debtor from entering into obligations and applying for new loans for three years from the date the judgment is issued.

Finally, the court can impose criminal liability on the debtor if it is satisfied that they have been negligent in their spending patterns given their financial capabilities and is intentionally harming creditors.

Debt panellist 2: Philip King, head of retail banking at Abu Dhabi Islamic Bank

This is an unfortunate situation to find yourself in. However, it is important that you remain optimistic and make all possible efforts to improve your financial circumstances.

Before you consider filing for personal bankruptcy or insolvency, I would recommend you reach out to your bank for any possibility of restructuring your debts. During this time, banks are being highly encouraged to be flexible and understanding of customers’ circumstances.

It is also in their best interest that you do not default on your debts as this could have considerable impact on their financial books.

I advise you to communicate with your bank to explain your current situation and your willingness to pay your debts as soon as you find a job. Depending on your agreement, you may be able to renegotiate the terms of your loans with reduced payments and a longer tenure. You may also ask your bank if they can offer you instalment postponements or payment holidays.

In addition, it would be worth checking if you have insurance policies against your remaining loans. Depending on the terms and conditions, the policies could cover involuntary job loss. In such a case, the insurance could support your monthly loan repayments and safeguard you from default for a predetermined period.

Declaring personal bankruptcy or insolvency should be your last resort at it could have long-term negative repercussions that may further delay your journey to a better financial position.

The process is cumbersome and may result in extreme measures such as liquidation of your properties to pay off your debts. It could also be expensive as you would need the support of legal experts to tackle your case.

However, should you decide to go down that route, I advise you reach out to a legal expert who could provide pro-bono support and give you advice on the appropriate next steps.

To establish a sound financial footing, it is important you seek avenues to boost your financial resources. This involves securing a job that will help you address your debt obligations and working out a sound budgeting plan that trims down your expenditures and increases your savings and emergency buffers.

While you continue to search for new job opportunities, you could also look into freelance or part-time work to help manage your situation.

Debt panellist 3: Nathan McFarlane, founder of

This is a nightmare of a situation to find yourself in and – from my personal experience – a very difficult one to deal with.

Your first port of call is to find some level of income and reduce all expenses to a minimum. You may feel like there is no solution and you are on your own but, rest assured, there is always a solution and you are most certainly not alone.

Your responsibility is to take action on everything you can do right now. This includes staying in communication with your creditors and ensuring that everything is in writing to show your good intent.

It is important to understand there may not be an overnight solution to your problem and coming to a resolution will take time.

By the sound of your description, your debts are below Dh200,000 if you don't include late charges and interest payments. Therefore criminal issues outside of bounced cheques are likely to be limited.

Talking to your banks to come to an arrangement to avoid further civil case issues would be sensible. For smaller amounts, civil cases are less likely but be aware that all creditors have the ability to file if they see fit.

Have you also considered a job in your home country? Providing there are no outstanding legal cases or travel bans, you can still pay your debts from your home country and then return to the UAE when you are more financially stable.

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

Updated: August 18, 2021, 5:00 AM