The Debt Panel: 'I have no job and can't repay my $217,835 loan'

Dubai resident was made redundant in 2018 and faces a legal case and travel ban for not being able to keep up with repayments

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I took out a personal loan of Dh800,000 ($217,835) in 2018, but lost my job the same month that it was approved. I was keeping up with the payments but started to fall behind at the end of the first year, as I couldn’t find another job.

There is huge interest piling up on the principal amount and I am aware that the situation will only worsen if I am unable to pay the monthly instalments.

I have not secured a full-time job to date, but have been working as an IT freelancer. However, the money I receive from this is minimal and it is hard for me to manage my day-to-day expenses.

To add to my worries, the bank filed a legal case against me, along with a travel ban. My situation worsened and a court in Dubai ordered me to pay Dh600,000.

I have no funds to repay this large amount of money. My family and friends are willing to support me financially but it is impossible that I can arrange to borrow Dh600,000.

The stress is unbearable and it is affecting my health. Can you advise me on how I can negotiate with the bank and come to a mutual agreement for settlement? JD, Dubai

Debt panellist 1: Sameh Awadallah, acting global head of retail banking at Abu Dhabi Islamic Bank

I can understand how stressful your situation must be but it is good to know that you are surrounded by friends and family who are ready to help.

The most important step for you to take is to respond to the court before the payment deadline is due. That might mean writing down your response and appearing in court, regardless of whether you think you can repay or not.

By responding to the lawsuit, either yourself or through a legal adviser, you can make sure the collector has to prove that you owe the debt, that the amount is correct and the debt collector has the legal right to charge you to collect it.

You may even be able to resolve the debt by responding or showing up in court as some banks would rather settle than go through extended litigation.

Responding to a debt collector’s lawsuit in court will likely put you in a better situation, cost you less in fees and give you more control over how you repay the debt.

Another important step is to seek advice from a legal representative, who will help you to understand your options. Your legal adviser will communicate on your behalf with the creditor and advise you on the best possible solution to resolve the debt.

Given your situation, I suggest managing your day-to-day expenses by trying to get an additional source of income that will help you to raise funds sooner.

Be mindful of your expenses and try to build a safety net that will help you in times of financial crisis.

You can try alternative ways to earn additional income through a hobby or by expanding your IT freelance network to find more work.

Tackling debt may seem overwhelming, however, stay focused on the outcome and learn to be more mindful of unnecessary spending. Eventually, you will gain control of your situation and enjoy freedom from debt.

Debt panellist 2: Jaya Ratnani, managing partner at Freed Financial Services

We understand that this must be an extremely challenging time for you and your family. In a short period, unpaid debt can turn into a monstrous sum as the interest and penalties are added to the loan. However, there are options to help tide over these difficult times.

Firstly, it is important that you continue to make payments even if it is a reduced sum to show your intent to pay the debt.

Always stay in touch with the bank's collection staff and do not avoid their calls. Continue to ask for solutions, such as a restructuring or settlement, based on your personal and financial situation.

While you did continue to make payments for the first year post-redundancy, you may have completely stopped making payments thereafter, which led to the bank to exercise its legal right to recover the total amount due by filing a civil case and a travel ban against you.

Under the loan agreement, the bank is in a strong position to win the case for non-payment and, in a majority of cases, court verdicts are usually in favour of banks. At this stage, the chance for negotiation and finding solutions with the bank become weaker as it has also incurred time and money costs to recover its dues.

However, it’s not too late and you can make a request to the bank for an out-of-court settlement.

Although you cannot travel, many companies employ remote workers, particularly since the Covid-19 pandemic.
Alison Soltani, founder of Leap Savvy Savers

A settlement plan allows you to pay an amount that is lower than what you owe the bank. This is possible if both parties mutually agree on the reduced amount.

You should try to convince the bank about your willingness to repay the loan. There are several factors considered by the bank when reviewing a settlement proposal, such as your personal and financial position, cash-flow situation and your repayment history.

Prepare a cover letter that explains the events leading to your current situation and inform the bank that you may be able to settle the loan via borrowing funds from family and friends.

Gather all the important documents related to your situation, such as a termination letter, bank statements, cash-flow position, and other assets and borrowings to support your request for a discount against the total amount owed on the loan.

Alternatively, you can also seek assistance from a professional debt management company, which can negotiate on your behalf the best settlement plan.

Debt panellist 3: Alison Soltani, founder of Leap Savvy Savers

I am sorry to hear that your job loss coincided with repaying a large loan.

In terms of repayment, I would first approach the bank’s relationship manager and attempt to negotiate new terms, for example, by lowering the interest rate or extending the time frame to pay off the loan.

Explain your situation and provide evidence of your attempts to seek employment.

As the stress is affecting your health, it may be worth liquidating any assets, including property or land that you may have either in the UAE or abroad, to pay towards the debt. Although not an ideal situation, the immediate priority must be repaying the loan.

You might also wish to seek legal advice regarding applying for personal insolvency in the courts.

The insolvency law was introduced in the UAE in 2020 to support individuals who face unanticipated financial difficulties and are unable to pay their debts.

As far as I am aware, the court appoints experts and a trustee to manage the financial affairs of the debtor during the court proceedings and throughout the agreed payback period.

Certain restrictions may be placed on debtors, such as the inability to apply for more credit or make large financial transactions without approval; however, these would be fully explained and agreed in court.

Concerning your job search, I would start thinking outside of the box. Technology skills are generally highly sought-after internationally. If your UAE job search has not been successful, perhaps widen your search to include global companies.

Although you cannot travel, many companies employ remote workers, particularly since the Covid-19 pandemic.

You may find that there are companies requiring remote IT support or website building and design. I would also advise you to consider your transferable skills and apply them to different industries and positions.

As far as managing your day-to-day expenses goes, it would be advisable to create a budget.

First, track your expenses and label them as needs and wants. You can begin by cutting down on the categories you deem to be wants, then analyse your needs and explore ways to minimise costs in these areas.

For example, you might consider downsizing your accommodation, batch-cooking or living close to your work and amenities to reduce transport costs.

I wish you the best of luck in repaying the loan and finding work.

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: May 30, 2023, 12:24 PM