I have been out of the UAE for the past two years to be with my mother who suffers from cancer.
My business partner has been running our company in my absence.
He took out a loan worth Dh100,000 ($27,229) on the company’s behalf. However, due to difficult operating conditions, the loan fell into default.
The bank’s debt collection agents are now contacting me and my family because I was the guarantor for the loan.
The agents are calling me daily from different numbers and threatening me with legal action and a travel ban.
I approached the bank directly to pay a lump sum of Dh50,000 to resolve the case. However, they are not being co-operative and want me to instead pay a settlement amount of Dh75,000, which is beyond my means. How do I deal with this situation?
Is it right for the bank to harass customers through aggressive debt collectors?
I have been a long-standing customer with the bank and would have hoped to receive better treatment.
The agents have access to all details of my company loan, my bank account, as well as my passport, visa and home country address. I feel this is a breach of confidentiality. Please advise. RN, India
Debt Panellist 1: Steve Cronin, founder of DeadSimpleSaving.com
I am sorry to see that your business has struggled while you are with your mother — you are doing the right thing looking after her.
Did your business partner take out the loan in agreement with you? I assume he is also a director and thus equally liable?
Company structure matters to some extent here.
If you are the guarantor of the loan, you are indeed liable for the debt if the company cannot pay. That is what a guarantor does.
A limited liability company should have limited liability, which would protect you.
However, many directors and managers of such companies have been found personally liable for the company debts, based on their decisions and actions in previous years.
If you have been named as a guarantor, then you effectively take on the debt.
The Bankruptcy Law provides some breathing space for a company to pay off its creditors under a “Preventive Composition” arrangement if it still has sufficient cash flow.
Otherwise, there may be a more formal bankruptcy process.
Some legal advice on the responsibilities and options for you and others in the company is important to clarify your legal liability and any protection afforded to you under the law.
You have offered Dh50,000 as a settlement and the bank wants Dh75,000, which you say you cannot afford.
The only way to resolve this situation is to talk to the bank directly, either by phone or, preferably, in person.
Meeting the bank staff face-to-face is more likely to help make some progress, although you should fully understand your legal situation before returning to the UAE.
Is the company still a going concern? If so, the bank may accept some form of restructuring.
This also applies if you personally have income from other sources and would be able to make a partial payment now, plus ongoing payments.
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The bank uses debt collectors in other countries because otherwise it is too easy for people to skip out of the country and avoid debt repayment.
Look at the terms and conditions of your loan as they probably authorise the bank to pass on your details in the event of default.
Debt collectors nearly always behave aggressively and there are horror stories of debts being “collected”, but not passed on to the bank.
Therefore, try to go to the source and deal with the bank directly.
If you are able to raise any further funds through personal assets, debt, family, your business partner or company property, this may help you to reach a settlement and find a way forward for your life and business activities.
Debt Panellist 2: Carol Glynn, founder of Conscious Finance Coaching
Having collection agencies contact you constantly can be very stressful. No one should have to endure such harassment.
Unfortunately, this kind of constant harassment is a common pressure tactic used by debt collection agencies in an attempt to force you into paying off the debt. They commonly use threats (often empty) to add pressure.
I would recommend speaking to your bank again. Lodge a complaint against the debt collection agency, outlining their harassment tactics. It appears they have overstepped the line of what is fair and reasonable.
All UAE banks are regulated by the UAE Central Bank and so they must adhere to the customer charter of the Central Bank.
This charter includes treating customers fairly and with courtesy. Harassment of this type is contrary to these guidelines.
You can also lodge a complaint against the bank and the debt collection agency with the Central Bank. Instructions on how to do this can be found on the Central Bank's website.
If the debt collectors are sharing confidential financial information with third parties such as your family, they are in breach of the data protection laws.
This can also be raised in your complaint to the bank directly and to the Central Bank if you decide to take that route.
That said, you have an obligation to repay the loan. You have been forthcoming with a solution and offered to make a lump sum settlement.
Do you still have access to these funds? If yes, offer this again, and if the bank refuses, as an alternative, request them to accept the lump sum payment as partial payment and convert the balance into a new loan with monthly payments you can commit to pay.
What is your business partner contributing towards repaying this debt? Can they at least pay the difference between your lump sum payment and what the bank is expecting?
Do you have other assets you can liquidate and use the funds to pay the balance due?
I hope this will help you find a way forward directly with the bank and so remove the involvement of the debt collection agency.
