'Do banks write off credit card debt after six years?'

The UAE’s civil law refer to debts being time-barred after 15 years but there are exceptions

In many countries, there is a defined time limit after which time a debt cannot be recovered. Alamy

I left the UAE in 2008 as I had some credit card debts I couldn’t pay. I haven’t paid them off yet and haven’t heard from the banks. When I left, I owed Dh80,000 but I guess the amount has increased by now.

How long do I owe the banks this debt? A friend told me that debts are written off after six years. Is that true and will I be able to return to the UAE without a problem? KR, South Africa

It is not correct that debts are written off after six years. In many countries, there is a defined time limit after which time a debt cannot be recovered.

For example, it is six years in the US and three years in Germany. The UAE’s civil law refers to debts being time-barred after 15 years but there are exceptions and specific provisions.

It is unusual for a bank not to attempt recovery of a debt of this size and time limits exclude any attempts that have been made to recover what is owed.

Even after this amount of time, a police case may still be registered and a bank can employ a third party to recover a debt.

There is a chance that KR will be detained at immigration should he try to enter the UAE.

Any money that was borrowed should be repaid, so KR should get in touch with the bank to negotiate a settlement. It is possible that it will accept a reduced amount if he can make a substantial lump-sum payment.

It is unusual for a bank not to attempt recovery of a debt of this size and any time limits exclude any attempts that have been made to recover what is owed

Keren Bobker,
senior partner with Holborn Assets

My husband died last year but his bank, HSBC, recently sent me an email addressed to him marked as “deceased”. It started with greetings and was from a new relationship manager introducing himself and requesting a face-to-face meeting to assist my husband with his future.

I was quite upset and more than a little cross that the bank sent this insensitive message. Surely if an account is marked as deceased, a bank would remove it from their mailing list?

I had contacted the bank earlier to access funds but can’t bring myself to complain about this. However, I don’t want this to happen again. EC, Dubai

I understand that this would have been an automated email but bank staff should remove the name of deceased customers from their mailing lists. The issue was referred to my contacts at HSBC and they acted very quickly, contacting Mrs C to apologise within hours. The bank account was also closed as previously requested.

A spokeswoman for HSBC said: “We take every customer complaint seriously and have taken this opportunity to review and improve our internal process. This should not have happened and we’ve apologised to Mrs C.”

I resigned from my job after 21 years. My current salary is Dh6,300 but the company's records show that my basic salary is just Dh500 as that was never changed. My sponsor is a free zone and their records show that my basic salary is Dh3,000.

The wage breakdown at the company always stipulates that 60 per cent of an employee's salary is the basic component. That means on my salary, it should be Dh3,780, not Dh3,000. How is my gratuity calculated? Is it based on the amount on the paperwork or what I am paid each month? PF, Dubai

The laws relating to employment in the UAE now apply to all main free zones, apart from the two main financial zones.

When an employee works for a free zone company, the free zone is the sponsor, rather than the actual employer.

The gratuity is calculated on the final basic salary and the company should use this. It is not uncommon for a contract to remain unchanged but the actual salary paid is what matters and the accounting and HR departments will have a record of this amount.

Article 51 of the new labour law states: “The full-time foreign worker, who completed a year or more in continuous service, shall be entitled to end-of-service benefits at the end of his service, calculated according to the basic wage as per the following: a. A wage of 21 days for each year of the first five years of service; b. A wage of 30 days for each year exceeding such period.”

It adds: “It is required based on the foregoing that the end-of-service benefit for the foreign worker in its entirety does not exceed two years’ wage.”

On the basic salary of Dh3,780, assuming there are no legal deductions and a service period of exactly 21 years, PF will be due a gratuity payment of about Dh73,710.

Keren Bobker is an independent financial adviser and senior partner with Holborn Assets in Dubai, with more than 25 years’ experience. Contact her at [e-mail]. Follow her on Twitter at @FinancialUAE

The advice provided in our columns does not constitute legal advice and is provided for information only