The Debt Panel: 'How can I restructure loans totalling $408,440?'

The Dubai reader invested in a failed restaurant using their life savings, personal loans and a credit card advance

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I earn a monthly income of Dh30,000 ($8,168) and my husband draws a salary of Dh25,000. We have been in the UAE for 17 years.

We invested all our savings and took out a personal loan of Dh700,000 and a credit card advance of Dh250,000 to invest in a restaurant, which was operational for two years.

However, the restaurant shut down in 2022 owing to operational difficulties. We owe a total of Dh1.5 million ($408,441) to several banks.

We also have two children. One of them is still at school and we pay Dh5,000 a month for her school fees, while our yearly rent is Dh80,000.

Our entire savings have been depleted and we are struggling financially. Growth in our careers is also stagnant, which makes it hard to receive a salary rise.

Is there any way to restructure our debts and financially plan for the future? SN, Dubai

Debt Panellist 1: Steve Cronin, founder of

I am sorry you find yourself in this situation.

I am not sure what made you decide to risk everything for a restaurant.

People have this idea that to be an entrepreneur or an investor, you have to go “all in” but this is almost always a terrible idea as many start-ups fail within the first three years.

Many people seem to invest in restaurants simply because they think they know what a restaurant is — how hard can it be?

It is important to understand what an awful investment restaurants are for inexperienced investors.

They require huge amounts of upfront investment to secure the location, design and fit out the interior, get the permits, hire the staff, buy the food and market the new restaurant.

So, you start massively in the red, and then you discover you have no idea how to run a restaurant efficiently to maximise income.

This is true of restaurants in the region — both large and small.

A huge percentage last less than a year or two, then are forced to close with all that upfront money wasted.

If they do survive, there will be continuing stress as the competition is relentless. Unless you have a background in restaurant management, it is not worth it — even then, success is unlikely.

Beyond investing in a restaurant, you made three big errors.

First, you invested all your savings with no diversification of risk or investment, and no emergency fund.

Then, you took out a personal loan of more than a year’s combined salary to invest in a highly risky venture — if the venture blows up, the debt remains, as you have discovered.

Most dangerously of all, you took out a big credit card advance to fund your investment.

The interest rate on a credit card is about 40 per cent a year, plus additional fees for advances.

There is no way a restaurant (or almost any business or other investment) will make 40 per cent a year, so making a profit becomes impossible from the outset.

As restaurants take time to generate cash, you can’t even pay any of the card balance back quickly.

The other problem with credit cards is that the high interest makes the debt balloon rapidly out of control.

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Your Dh950,000 debt has become Dh1.5 million. One good thing is that the restaurant is no longer operating and you can now focus on restructuring your debt — and this is urgent.

You need to obtain a consolidation loan that will wipe out all your credit card debt and convert your total outstanding into one loan.

Talk to your main bank (and other banks), present your salaries and overall financial situation, then show them that you are serious about paying down your debt if you can have it restructured.

Try to talk to a senior loan officer in person at the bank's headquarters, as your debt burden is significant and you can’t rely on talking to a junior person on the phone.

If you have not yet defaulted on any minimum payments, this will work in your favour.

At the same time, see what you can do to pay down any part of the debt.

Do you have any assets you can sell? Can you borrow money from a family member? Even if you offer to pay them interest, it will be lower than the interest from the bank and certainly your credit card.

Look at ways to slash your expenses and boost your incomes, so you can improve your savings rate
Steve Cronin, founder of

Look at ways to slash your expenses and boost your incomes, so you can improve your savings rate.

Can you find a better-paid job in another country, or change companies or industries?

Can you use any skills you have to take on additional work, coach people or start any number of low-cost side hustles that only involve your time and effort rather than your money?

A clear financial plan can only come when you know what rate and term you can secure for your consolidation loan.

Then you can work towards paying it down, building an emergency fund, identifying any major expenditure coming your way such as university fees, and learning how to invest in more sensible assets such as diversified global stock and bond funds or buy-to-let property.

You face a tough few years to get past this but you will be a lot more savvy with money when you do.

Debt Panellist 2: Carol Glynn, founder of Conscious Finance Coaching

I am sorry your business closed and you are left with this debt. This must be very stressful.

This is a substantial financial burden on a combined salary of Dh55,000.

I would recommend you approach your main bank and discuss options with them.

Request they consolidate the loans into one debt and agree on a long-term repayment plan that you can commit to.

I would also suggest focusing on repaying the credit card advance as a priority, as this type of debt is extremely expensive.

Do you have any assets you can liquidate to help reduce the debt?

Can you increase your income through a low-cost side business or part-time work?

I would recommend being very conscious of your spending habits and focusing as much cash as possible on reducing the debt over the coming years, while continuing to seek higher or additional sources of income.

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: January 18, 2023, 5:00 AM