I lost my job in the UAE and returned to my home country a year ago.
When I left, I had an outstanding personal loan of more than Dh40,000. I was able to make a one-off payment of Dh8,000 when I first returned home, but have not paid anything towards it over the past nine months. I now owe a total of Dh60,000.
Not long after I returned home, I contacted the bank through WhatsApp and email to request a restructuring of the loan as my new salary was not enough to cover the current monthly instalments. The bank rejected my request and registered a police case against me.
But now, after a year of working and saving, I am able to pay the bank back in full.
How can I do this? I also understand that once I have paid off the loan, I will need a no-liability letter from the bank for it to return all my post-dated cheques.
Because I am not in the UAE, I am uncertain about how to get those documents. Can you advise me, please? BG, Malaysia
Debt panellist 1: Steve Cronin, founder of DeadSimpleSaving.com
The banks have had to deal with many cases such as yours during the pandemic. You are one of the few who can now pay that debt off. I would be wary of going back to the UAE until you have paid it off and have received the necessary paperwork to prove it.
Your first step should be to contact the bank and make arrangements with them to pay the debt off in a lump sum. They are not going to say no to this as they will be getting their money back.
However, it may be difficult to avoid the extra fees and interest they will lump on top of the amount owed. Try to talk to them over the phone, even if it is expensive from abroad as you may make more progress than sending an email.
You can try negotiating with them and saying that you are now in a position to pay off the original outstanding balance – see if you can close the loan account by only paying the Dh40,000, or at least the Dh60,000 without any extra charges.
Some experts would say that you will have more success negotiating the settlement by hiring a lawyer, but there is no guarantee of this and you would then have lawyer fees to consider on top of the bank charges.
You need the bank to ensure the police case against you is closed. I wouldn’t worry about the post-dated cheques, although you can ask for evidence of their destruction.
Bouncing a cheque is no longer a criminal offence in the UAE. Once the loan has been officially closed, then any cheques related to it will not have any power over you.
Once you have reached a verbal agreement with the loan department, request a settlement agreement that has been signed and stamped on the bank’s letterhead. This will state the amount agreed for closing the loan and prevent the bank from requesting additional fees later.
When you have successfully made the transfer and paid off the debt in full, insist on getting a clearance letter from the bank as proof that you have paid off everything owed. The police will need this to close out the complaint against you.
You should also get a release document stating that the bank has withdrawn their complaint to the police. During your negotiations with the bank, you should try to get it to clear your record with the police on your behalf.
Debt panellist 2: R Sivaram, executive vice president and head of retail banking products at Emirates NBD
Firstly, I am glad you continue to be conscientious about your financial obligations after leaving the UAE.
I would suggest you get a clear understanding from your bank of the total outstanding amount owed to settle your loan in full.
Based on the bank's advice, you can transfer the amount owed to the specified account. Once the bank receives the funds and closes your loan, request them to issue you a clearance letter for the loan, along with a no-liability letter.
The clearance letter will provide the required evidence that you have fully paid your loan and the supporting no-liability letter will prove that you have no other liabilities pending with the bank.
Subsequently, request the bank to withdraw any legal proceedings and send you confirmation of this in writing.
Given you are being forthcoming about clearing your loan, I am confident that the bank will be supportive in addressing the matter swiftly.
Debt panellist 3: Carol Glynn, founder of Conscious Finance Coaching
Well done for generating enough savings to pay off your loan. You can shortly close the matter, learn from it and put it behind you.
It would have been beneficial to make some payments each month to prevent late payment fees and reduce the compounding interest impact of non-payment. It may also have kept your relationship with the bank on better terms.
It is unfortunate the bank did not support you in your time of need. Dealing with the issue in person is always the best way but as you were out of the country, phone calls, followed up by emails of confirmation with a relationship manager is the next best thing.
Collection departments can be much less compassionate to clients' circumstances as their compensation often includes commissions on receipt of overdue payments.
It is wise to obtain a no-liability letter from your bank once you have paid off your loan, regardless of the circumstances.
You can request the return of your post-dated cheques but many banks do not return them, so you need to be prepared for this.
It is important to request the bank to provide you with your clearance or no-liability letter. Read it carefully to ensure it is correct and complete. This should give you sufficient peace of mind and is evidence that you have paid off the loan should any issue arise in the future.
This can all be done by phone but always follow up with an email to confirm and try to deal with just one manager or senior individual within the bank.
It is also important that you request the bank to cancel the police case. Once done, they should confirm it to you in writing. You can confirm this independently by contacting the police directly, providing your passport details and asking if there are any outstanding cases against you.
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 firstname.lastname@example.org