During the coronavirus pandemic and for the past few years, I haven’t had a stable job and have not been receiving a regular salary.
I told my friend that I could not commit to a regular debt repayment plan at that time. However, I got a job last month with a monthly salary of Dh7,500.
I told my friend that I can start repaying her from next month since I had to urgently settle credit card dues first.
I replied to the legal firm acknowledging receipt of their notice and also sent them proof that I did not have the capability of repaying the debt cumulatively. I sent them proof of my income.
I have maintained open communication with my friend since I borrowed money. I never blocked her and I have every intention to repay her.
I requested for reasonable debt settlement terms as the legal firm has asked me to pay back the money in a week. What can I do if they refuse my debt repayment terms?
Will my friend go to court? Please advise. JJ, Dubai
Debt Panellist 1: R Deepakchandran, group head of retail products at Emirates NBD
It is unfortunate that you are facing this difficulty and I empathise with your situation.
To your query on whether your friend can take you to court – yes she could, if there is a clear document and proof of you having borrowed money from her. This is admissible in the court of law.
Having said this, given that you have maintained open communication with your friend, I would suggest first talking to her to see if she is willing to agree to your repayment terms.
If your friend is still co-operative, I would recommend working out a plan detailing the amount of money you would be able to pay back each month and documenting this.
However, if she is not willing to reconsider, I would suggest that you get some legal advice to see what your approach could be.
Given your unforeseen circumstances during Covid and the fact that you now have a regular job, a lawyer may be able to recommend a prudent approach.
In parallel, you should also consider consolidating your existing savings, if any, and liquidating any other assets you may have back home to gather the funds to pay off the debt.
Also, do try to foster a habit of putting a percentage of your earnings aside as savings to help you for a “rainy day”.
It is commendable that you are reaching out for assistance with your situation to put in place changes before it is too late. I wish you all the best in arriving at a positive solution to your situation.
Debt panellist 2: Jaya Ratnani, managing partner at Freed Financial Services
Based on the information provided, it appears that you have been served with a legal notice regarding your debt of Dh20,000 to a friend, who has hired a legal firm to recover the debt.
While I cannot provide legal advice, it's essential to understand that in the UAE, there is no specific legal framework that regulates personal loans between friends.
However, if the debt is acknowledged and the lender has the relevant documents to prove the existence of the loan, they can proceed with legal action if the borrower fails to fulfil their debt obligation.
You have acknowledged the debt and have been maintaining open communication with your friend, which is a positive step.
The key now is to negotiate reasonable debt repayment terms with the lender and the legal firm. It is essential to communicate clearly and honestly with them, highlighting your financial circumstances and your intention to repay the debt.
If the lender and the legal firm refuse your debt repayment terms, you may want to seek legal advice from a qualified lawyer to understand your options and the potential consequences of not being able to pay the debt.
As for whether your friend will go to court, it would depend on the circumstances and the lender's approach to debt recovery.
It's important to note that debt resolution is a complex and time-consuming process, and any decision to enter into litigation should be carefully considered.
It is crucial to keep all lines of communication open and to be transparent about your financial situation, as this can help to establish a mutually beneficial debt resolution plan.
Debt panellist 3: Alison Soltani, founder of Leap Savvy Savers
In this situation, if you do not pay within the specified time frame, the legal firm may then file a case at court.
Usually, the first step is a personal request to pay, followed by a legal notice, and if this is refused or ignored, the case can be followed up at court.
However, it would be in your friend’s interest to show a contract proving that she lent you the money and the agreed timeline for repayment.
This would theoretically prove that you have refused to abide by the terms of the loan.
In your case, if you have evidence that you could not repay the loan financially, but you are open to repayment negotiations now that you have secured a job, this is favourable for you should a civil lawsuit be raised.
Your friend will incur legal fees for taking the case to the courts, and depending on the evidence that she has, there is no guarantee that the case will be successful.
The strongest evidence is a written and signed contract between the two parties. Other forms of communication, such as WhatsApp messages, can be considered as evidence, too.
I recommend contacting your friend and the legal firm with a repayment schedule starting as soon as possible.
If possible, apologise for not being able to pay a lump sum and explain your financial circumstances.
Calculate how much you can regularly and realistically pay while maintaining your bills and obligations given your current situation. Send a schedule with the exact dates in which you will pay each instalment until maturation.
Arrange for each payment to be made two to three days after payday just in case there are any delays with your income.
The easiest way to initiate and maintain this arrangement is to request bank details and set up an automatic bank transfer for each payment, then treat it like any other bill.
If your friend sees the steps you are taking to repay the loan, she may reconsider taking the case to court, given the costs associated with the process.
However, if the case is referred to court, it would be wise to gather all evidence that you have remained amenable and open to repayment since the loan was issued, such as emails, bank statements and messages.
It may also be necessary to seek legal advice at that point, although it is unlikely to reach that stage in the process if you lay out a repayment plan and start making payments as soon as possible.
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 email@example.com