The Debt Panel: 'Is bankruptcy an option if I can't pay my $136,150 debt?'

A UAE resident working remotely has fallen behind on four credit card instalments after his business stalled during the pandemic

Credit card debt is the most expensive debt to hold, so paying the balance in full each month is key. Nick Donaldson / Getty Images
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I have been a proud resident of the UAE for the past 18 years and own a small business. Over the past two years, my business has stalled due to the pandemic and I am now unable to pay my debts on time.

My main debt derives from four credit cards, which amounts to Dh500,000 ($136,147). Each credit card is with a different bank. I owe Dh200,000 on one card, Dh150,000 on another, Dh100,000 on the third and Dh50,000 on the fourth.

In total, my instalments for the four credit cards range from Dh25,000 to Dh30,000 a month.

Until now, I have been paying them off regularly. However, I missed the repayments last month and I will be unable to pay this month’s instalments.

I am currently living outside of the UAE to save on costs and working remotely.

I do not want to leave the debt as it is. Due to the compounding interest that is being applied every month, all of my payments are going towards this.

The UAE has given a lot to me and I do not want to default on the banks. Is personal insolvency an option or is there something else I can do? UQ, Dubai

Debt panellist 1: Steve Cronin, founder of

Running a small business is hard and it has been incredibly tough over the past two years. What’s not clear to me is whether your credit card debts were business expenses or personal expenses that you relied on your business to cover.

Either way, debt puts pressure on a business to succeed as small businesses are vulnerable in downturns. Credit card debt is much worse as the interest rates are very high and the debt expands rapidly.

It looks like you have been paying off just the minimum amount, but with credit cards you must pay the balance off in full each month.

If your debts were taken on by your business and it is a limited liability company, you would, in theory, have “limited liability” for the debts following company bankruptcy. Personal card debt is much harder to walk away from, even when you are in another country.

To claim personal insolvency through the UAE courts, you would have to be in the country. With these debts hanging over you, you should not return to the UAE until they are fully paid off or you have restructured them in agreement with the banks.

Dealing with four banks will be tricky because they will have different approaches and levels of responsiveness. Emails may go unanswered, so you must call them. If the first person is unhelpful, try again. Use any friends or contacts you have in the UAE to help you reach a decision maker.

You will struggle to get a consolidation loan as you are out of the country and self-employed. However, banks may be willing to grant you a payment holiday or consider some kind of restructuring.

Be honest with yourself about the income-generating potential of your business. Is it recovering or do you need to get a job? Go to the banks with a clear plan of what you will be able to afford and by when. Note which banks are more open to negotiation: you may need to focus on paying down the smallest debt, so you only have to deal with three banks.

Not being in the country gives you a bit of room to negotiate and insist that they work something out. Don’t be surprised if they refuse and you are faced with rapidly growing debt — and calls from collection agencies.

Can a family member lend you some money to reduce your debt burden? Are there any assets in your business or personal life that you can sell, such as a house? You must get creative and find capital or income in any way possible to pay down the debt if the banks won’t help you.

Debt panellist 2: R Sivaram, executive vice president and head of retail banking products at Emirates NBD

This is indeed a very challenging situation to be in, especially after having spent nearly two decades in the UAE. Unfortunately, your business seems to have been quite badly affected during the pandemic.

It would be best if you communicate your situation with the various banks proactively.

You could inform them that you are committed to clearing your dues and request for an additional moratorium period on monthly card payments to allow yourself time to become more financially stable.

Credit card interest rates are very high, so the interest charges result in the debt growing very quickly.
Carol Glynn, founder of Conscious Finance Coaching

If you have a primary bank, you could potentially talk to it to see if you can consolidate the credit card debt into a low-interest personal loan, as well as requesting relaxed payment terms. We have seen many banks being supportive of restructured payment plans, especially since the pandemic.

Given you have multiple credit card debts with different banks, this negotiation may have to be handled separately with all the individual lenders. You could consider working with a licensed debt management agency to help with the negotiations if the primary bank is not able to consolidate all your debt.

An alternative is to consider consolidating your existing savings and liquidating some assets back home to gather the funds to pay off the banks yourself.

Banks may also be willing to lower the outstanding loan amount and waive some fees in favour of a lump-sum payment. In all of the above scenarios, it is important to continue communicating to the banks you intend to pay and requesting appropriate payment terms.

With respect to your question on filing for personal insolvency, it would be best to contact a lawyer familiar with the matter and seek guidance. I wish you the best of luck.

Debt panellist 3: Carol Glynn, founder of Conscious Finance Coaching

Well done for taking action on this situation quickly as credit card debt is the most expensive debt to hold.

Repaying only the minimum payment on each credit card results in interest being charged every month. Credit card interest rates are very high, so the interest charges result in the debt growing quickly.

As you are unable to repay the minimum instalments, you will also incur late payment fines. These fines are added to your outstanding balance and the following month, you will also pay interest on the fines. This compounding effect is how credit card debt escalates very quickly.

Can you get a personal loan in your current country and use the funds to repay all your credit cards? This would be the cheapest way forward for you as it prevents late payment fines and compounding interest charges each month.

You can also approach your banks in the UAE and request a consolidation loan. If you have a positive relationship, they may be open to discussing your situation and coming up with a mutually acceptable repayment plan.

A consolidation loan carries lower monthly repayments so, ideally, it will be easier for you to meet your obligations.

Personal insolvency is an option but it is a last resort. It’s important to understand it does not relinquish you of your debts and you are expected to repay them in line with the court orders.

It is also worth considering that personal insolvency stays on your record for at least five to 10 years and applies internationally.

It may negatively impact your financial life for many years. Finding a way to repay the debt is always the preferred option.

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: April 20, 2022, 5:00 AM