It was August 2016 when Joseph realised his debt situation was out of control.
He received a pay rise at work, taking his salary as an engineer to Dh9,000. But rather than feel overjoyed, it only highlighted how little he would see of that money.
At the time Joseph, who does not want to reveal his name, was paying out Dh12,000 on debt repayments on a monthly basis for Dh140,000 in liabilities on six credit cards and one loan, and his situation was constantly getting worse.
Fifteen months on and the Filipino designer is in a very different situation: he has restructured debt repayments with three of the banks to an affordable monthly total of Dh4,000, and he is in final negotiations over a fourth payment – something he has achieved by speaking directly to his lenders and by complaining to the Central Bank of the UAE.
“I am proof that negotiation works,“ says the Sharjah resident, who now owes less than Dh100,000 and hopes to be debt free in under three years. "My biggest regret is that I did not turn to [the lenders] in the first place.”
Instead, Joseph chose to ignore calls from his lenders when his debt situation escalated, turning his phone off to avoid confrontation.
“Ignoring calls does not work," he says. "When I finally went to the banks, they did something. I just wish I had spoken to them earlier, as the interest built up a lot during the time I ignored them.”
Ambareen Musa, the chief executive of Souqalmal.com, says a well-thought-out and timely negotiation can make a huge difference in your overall financial situation.
"It is important to be proactive and not wait until debt has completely taken over your finances. Not only will the interest keep on piling up, but hefty late payment charges and penalties will inflate your debt," she says.
“In the end, make sure you are realistic, both in terms of expectations and follow-through. Be prepared to meet the creditor halfway, but don't agree to a payment plan that you can't keep up with going forward.”
While negotiating has paid off for Joseph and he is now managing his finances better, he says the process required patience and diligence to ensure he hit all the right steps.
He says the most important tip he learnt was to make sure everything was in writing; while he often spoke to his lenders by phone, he always followed up with an email.
Throughout the process, he says he was honest about his ability to repay, and persistently returned to the banks when they rejected his restructure request or offered him a deal that was not affordable.
"People don't like to talk about debt, but it is free to talk to the banks," says Joseph, who works in Dubai. " I starting picking up the calls from the banks and sending emails to the collection departments and eventually it worked."
The father of one's situation began to spiral out of control at the beginning of 2015, when he switched jobs and was made redundant a month later. Out of work for almost six months with a pregnant wife and bills piling up, the 37-year-old turned to some old credit cards to take out cash.
“I had six credit cards, which sounds a lot but they were from those peak times when random sales people used to call offering cards. I never thought ‘I don’t need these’, I just thought I’d keep them,” says Joseph, who moved to the UAE 10 years ago.
It was these cards – three from Mashreq, and one each from Citibank, Dubai First and Union National Bank (UNB) that he used to withdraw cash, using the money to pay Dh25,000 in medical bills for his wife’s delivery and the care of their newborn in the intensive care unit.
Other niggling bills such as the Dh42,000 rent for their one-bedroom Sharjah apartment, a visa for his daughter and general expenses encouraged him to withdraw more. He also had an old Dh50,000 loan from Mashreq to pay.
By living on debt, Joseph's outstanding credit grew to Dh140,000 by August 2016. To survive, he withdrew money from one card to pay another, shuffling funds from one bank to the next to keep his creditors at bay. But when he started missing payments and receiving threatening calls, he dodged the calls hoping the problem would go away.
"They'd say "I'll file a police case' or 'you'll be banned from your job'; even my mum in the Philippines received a call," he says.
Things came to a head when he received the pay rise from his new role and had to borrow money from his wife, who was unaware of the financial crisis he was in.
His wife earns Dh7,000 a month with her only debt a car loan with monthly repayments of Dh900.
“I knew I was in trouble because I could not meet the minimum payments,” Joseph recalls. “I needed to pay Dh12,000 a month, but my salary was Dh9,000 and had previously been Dh7,500. Sometimes I would ask for money from my wife or friends and I thought, ‘this has to stop’,” he says. “I did not want to burden my wife and there was pride involved.”
Joseph began talking to the banks, telling collection departments that he could not meet their demands. He also sent emails to all four banks requesting a restructured payment plan.
To help his case, he created a statement of accounts, illustrating his income and outgoings; he provided salary slips and ID information, even going in person to the banks to plead his case.
Michael Routledge, the founder of the debt advice site savememoney.ae, says the key to restructuring a debt is persistence. "To successfully negotiate with the banks you need to be willing to work hard, and be in it for the long game," he says. "It is important to show that you’re willing to do whatever it takes to ensure your lenders are repaid."
Mashreq, which receives his monthly salary, was the first to respond positively at the end of last year, agreeing to a restructured monthly payment of Dh1,040 over 50 months on the loan and three credit card debts of Dh45,000 from the Dh4,000 in installments he was paying before.
Mashreq did not comment on Joseph's case.
Dubai First, he says, demanded an upfront payment of Dh3,500 before they would consider a restructure on his then Dh45,000 credit card debt. In November last year they agreed to a new payment rate of Dh1,616 over 36 months.
Dubai First did not comment on the case.
However, Joseph says Citibank and UNB were less responsive, something that prompted him to file a “last resort” complaint to the Central Bank via its online complaints section.
Citbank resolved his case in December last year, once Joseph was able prove he was financially committed to repaying the debt. The bank agreed a restructured amount of Dh1,040 per month for three years on his Dh29,000 credit card debt. He previously paid almost Dh4,000 per month.
A spokeswoman from Citibank says the financial institution takes “responsible finance seriously” and helps its “customers manage their credit and practice responsible finance by making wise borrowing decisions to maintain a healthy credit history”.
"We have a rigorous due diligence and risk assessment process in place to determine customer eligibility for specific products and services and work with the Central Bank to manage any given customer feedback," the bank said. "Each customer case is unique and requires a different approach in terms of debt restructuring. Customers can visit our website for advice on how to manage credit wisely."
Joseph's biggest concern now is resolving his credit card debt with UNB, which has mushroomed to Dh18,000 from Dh9,000 a year ago purely on charges, such as a Dh300 late payment fee, Dh200 over limit fee, and about Dh90 for credit shield insurance.
Despite four complaints to the Central Bank, two of which received approval, Joseph claims the bank had refused to negotiate. The Central Bank was unavailable for comment.
However, after The National contacted UNB, they have tentatively offered to reduce his outstanding payment to Dh9,000 - though Joseph is still negotiating the payment terms of that settlement. While UNB confirmed it was in touch with the debtor, it declined to comment further.
While Joseph found the negotiation process hard, he advises against using debt management companies as they simply charge you for a job you can do yourself.
"Why pay money to people when the banks are calling you," he says. "Instead, answer the calls and deal with it directly yourself. The debt collection companies were asking me to do the same thing that the banks were – it was better to do it myself. It just takes a bit of hard work."
Ms Musa says negotiating a restructured repayment plan or debt settlement takes time and patience.
"It might take several attempts to even get in touch with the right person in the banking organisation that can hear out your case," she adds.
"Some tips to successfully steer a debt settlement negotiation in your favour include offering to pay cash and settle immediately (creditors prefer a lump-sum payment 'now' over staggered payments 'later') and making sure you get every agreement in writing."
Looking back, Joseph says he understands why and how his financial problems started: “Part of it was circumstances; being without a job for six months was difficult. Nobody would hire me and I was under a lot of stress for the hospital bills for my daughter’s birth and her visa,” he says.
But he adds that the biggest lesson he has learnt is not to use credit cards. Today he has no cards, and says his finances are slowly starting to recover from his mistakes of the past.
“Now we don’t spend very much,” he says. “We cook at home and don’t go out to the cinema. We just go to the park, which is free to help us save."