A nine-step guide to help you renegotiate bank debts in the UAE

From creating a comprehensive statement of your accounts, to speaking to your bank in person and, if all else fails, complaining to the Central Bank of the UAE - here's how to get your liabilities in order

Ambareen Musa of Souqalmal.com says residents that own homes or have high levels of personal debt, may be adversely affected by higher interest rates. Photo: Souqalmal.com

Step one: Create a statement of accounts

Michael Routledge of savememoney.ae says this needs to show lenders a transparent summary of your financial situation, including your incomings, outgoings, debts and remittances.

Ambareen Musa, of Souqalmal.com, says “getting all your ducks in a row” is important. “Organise all the paperwork - agreements, payment history, account details and bank notices.”

Mr Routledge says you will have to do the lion’s share of the work. “Why should the lenders have to do it, so try to make their life easier by keeping them as informed as possible," he adds.

Step two: Analyse your expenditure

Mr Routledge says you should assess what you spend on to see what you can cut, as lenders will be analysing whether you are taking the situation seriously.

"An example of this is people sending money back to their home countries to support their extended families," he says. "While supporting your family is an admirable cause, this is not an expense you can expect the lenders to accept as your necessary cost of living. It is unfair to expect the banks not to receive repayments based on this."

Step three: Speak to the bank

While Ms Musa advises doing this straightaway to avoid late payment penalties piling up and debt collectors getting involved, Mr Routledge advises going to the bank in person as a face-to-face meeting can often prove more effective.

Step four: Start bargaining

Base your negotiations on the original balance and not the one inflated by fees and penalties, advises Ms Musa. She also suggests planning a repayment strategy before you approach the bank. This should reflect what you can realistically afford to repay. Don't guess the figure, do the calculations to ensure you are accurate.

Step five: Be persistent 

Mr Routledge says it is unlikely a bank will agree to restructure at your first attempt. “Be persistent and keep revisiting your lenders until you’re successful,” he says, adding that it is also worthwhile to inform banks when other financial institutions have accepted your requests to reschedule your debt.

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Step six: Get it in writing

If any agreement is made, ensure the bank sends a written confirmation with the restructured debt repayment plan detailed in full. That way you have proof if anything goes wrong further down the line.

Step seven: Pay a lump sum

One tip to successfully steer a debt settlement negotiation in your favour is offering to pay cash and settling immediately, says Ambareen Musa, who says some creditors prefer lump-sum payments over staggered payments.

Step eight: Keep tabs on your credit report

It is important to make sure the changes in your debt situation and amount owed are reflected in your report, says Ms Musa. So as each debt is repaid, check this is updated in the report.

Step nine: If all else fail, complain to the Central Bank of the UAE

As the regulatory authority over banks, the Central Bank has a clear process for lodging a complaint via its website.

Ms Musa says this would apply “when calls from debt collectors can quickly escalate from being gentle reminders to full-blown threats”.

“If that's the case, debtors can complain to the UAE Central Bank," she says. "Similarly, if the bank completely refuses to interact with the debtor to discuss a repayment plan, goes back on a previously agreed upon payment plan or in any way harasses the debtor, filing a complaint with the Central Bank is completely justifiable.”

To make a complaint, visit centralbank.ae and click on Complaints and Suggestions. Complaints can be filed online, via fax or in person by visiting any of the Central Bank's branches in the UAE.

Once a complaint is filed, a reference number is generated, which must be quoted whenever an enquiry relating to the complaint is made. When a decision is made, the Central Bank will notify the debtor via email or SMS.

“However, [the Central Bank] encourages residents to first try and settle any dispute with the bank directly,” adds Ms Musa.