The Debt Panel: 'How can I repay my loan without a job?'

The Abu Dhabi resident is staying with a friend, has no income or ability to pay rent or buy food

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In 2018, I took out a Dh55,000 (14,976) loan for home renovations and to pay for my mother’s medical treatment. I regularly paid the monthly instalments of Dh2,410 until July 2020, when I lost my job because of the Covid-19 pandemic.

Since then, I have been unable to find full-time employment. I was able to work part-time for much less money but my visa expired three months ago and I’ve not worked since then.

I was able to pay a lump sum of Dh5,000 towards the loan and at the time, there was just four payments left on it.

Now, the bank is saying that I owe Dh29,000 on the loan. I also have a credit card with a limit of Dh20,000 but I now owe Dh37,885 on it from accrued interest and late payment charges.

I have explained my situation to the bank but they lodged a case against me and the collections department is harassing me. They are also calling my sick mother in India.

I am depressed and don’t know what to do any more. I am staying with a friend as I can’t afford to pay rent or buy food because I have no income. Can you advise me on what to do? RR, Abu Dhabi

Debt panellist 1: R Sivaram, executive vice president and head of retail banking products at Emirates NBD

It is unfortunate that you are facing this difficulty and I empathise with your situation.

Since you have a considerable amount of debt accumulated, I would recommend that you reach out to a senior official at your bank and share full details of your financial position.

Request a revised payment plan over a longer term that will help you to continue paying off the loan with lower monthly instalments.

Given you are currently without a job, you could also request a temporary payment holiday followed by a clear schedule of payments you would be able to honour.

Your bank may require supporting documents to assess your request and if your repayment track record has been good, it will most likely be flexible with arriving at a mutually acceptable plan.

I would emphasise that it is important that you secure an agreement with the bank for your loan restructuring.

The bank may also ask you to surrender your credit card so that you stop racking up further debt while you plan to clear your existing dues.

If you have not done so already, evaluate if there are any assets that you can liquidate here in the UAE or back home that you can use to settle part of the outstanding amounts owed.

While your monthly expenses may seem reasonable, please scrutinise these to find ways to further minimise outgoings through a good budgeting and spending plan.

A credit card can be a helpful financial tool to manage your daily payments and transactions conveniently, access short-term credit, attractive shopping deals and discount programmes as well as earn rewards based on your spending.

However, if one’s credit card spending gets out of control, it can lead to potential financial problems.

Paying only the minimum amount required every month is a common practice adopted by many cardholders.

Bear in mind, however, that this can result in the debt continuing to grow due to interest charges, leading to larger monthly payments and the threat of getting into a debt spiral.

The debt collectors should not be calling your mother or any family member to follow up on the repayments, given they have your contact details.

I would suggest you also bring this issue to your bank’s attention in writing and request that they stop following up with your family.

If you still continue to have trouble with the collectors, file an official complaint with the bank and subsequently with the Central Bank of the UAE if the issue remains unresolved.

It’s best to send this information via certified mail and keep a copy of your request for your records.

I wish you the best of luck in arriving at a good settlement plan with the bank and also in finding new employment soon.

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

The pandemic has undoubtedly derailed the financial plans of many people and their ability to make debt payments on time.

Like yourself, many borrowers are facing the uncomfortable reality of missed payments and legal action against them.

This is understandably a very stressful position to be in. However, the best thing to do in this situation is not to run and hide.

It is extremely important to ensure you always answer the collection calls and do not avoid them.

Unpaid debt over a period of time can turn into a monstrous sum as the interest and penalties get added to the loan.

Jaya Ratnani,
managing partner at Freed Financial Services

Most people avoid bank calls because they do not know what to say. This leads to the bank allocating the case to overseas collection agencies that will send representatives to visit your home and call your family.

You must be honest and explain your situation to the bank to find the best solution.

Unpaid debt over a period of time can turn into a monstrous sum as interest and penalties get added to the loan. However, there are options to help you tide over these difficult times.

Based on your current circumstances, the best possible solution is to talk to the bank and request a settlement plan.

In scenarios where the borrower has very limited means to pay, the bank can consider settling the debt at an amount lower than what is owed.

In such scenarios, if one can pay a single, lump sum payment, there is a possibility to obtain a higher percentage discount.

If one does not have the means to arrange a lump sum amount, then the settlement can be done through a payment plan. However, the amount of discount would be lower.

To engage in a payment plan solution, the bank would need to establish your ability to repay based on a fixed source of income.

It would be advisable that you try to find full-time employment rather than working on a part-time basis for the banks to consider your request.

Until you find employment, you can seek the help of friends and family to provide a guarantee for your payments. Once you find full-time employment and are ready to take over the payments, you must notify the bank and release the guarantor.

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

I am sorry to hear about your unfortunate situation.

I would first make a complaint to the bank about the harassment of yourself and the calls to your mother in India.

Unless your mother signed for the loan, she is not liable for the debt and should not be contacted regarding payment of the loan or credit card.

You can complain to the bank first, then the UAE Central Bank if the bank does not resolve the issue within 30 days.

You can file a complaint by filling in the form on its website, calling them on 800 22823 or in person at one of their branches in Dubai, Sharjah, Al Ain, Ras Al Khaimah or Fujairah. They can offer support and advice for your circumstances.

The next issue to tackle is your income. The bank will be more sympathetic to your case if you have evidence that you are trying to secure employment.

I recommend applying to different industries and roles than your main career and in the meantime, trying to find different ways of making money.

Depending on your skill set, you may be able to make money as a freelancer. For example, someone with a teaching qualification could also work as a tutor, mark exams, proofread essays or write content.

There are many online platforms for freelancers to offer services, so try not to limit yourself to working for customers only in the UAE.

Ensure you are utilising platforms such as LinkedIn and Indeed — upload your CV and network with others in your industry to discover opportunities.

Watch: Some of the stats behind the UAE's hiring boom

The faster you can start paying back the debt, even in small amounts, the better chance you have of resolving the issue with the bank.

Finally, seek help for your mounting debt. It may be worth contacting a lawyer and asking for more information on whether the UAE’s financial insolvency law could apply to your case.

Like declaring bankruptcy, it offers protection for the debtor and establishes a negotiation between you and the creditor.

The court appoints trustees to carry out the proceedings and although you may be subject to certain conditions, such as an inability to apply for further credit for three years, it may be a viable solution for you.

I hope you find gainful employment and resolve the debt issues very soon.

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 [e-mail]