The Debt Panel: 'A UAE bank is chasing me for a liability from 1997. Do debts expire?'

The American, who left the UAE 22 years ago, says his Dh5,000 credit card balance has mushroomed to Dh200,000

Illustration by Mathew Kurian 

I was recently contacted by a debt collection agency by phone on behalf of a bank in the UAE. They alleged there are outstanding credit card dues from 1997 for some Dh200,000. I left the UAE in November 1997 after a stint there working for a trading company.

I remember having one credit card and if there was a balance left on it, it would have been less than Dh5,000. I may have inadvertently missed the payment when I left. I have not had any communication with the bank since leaving and I probably did not give the bank my forwarding address. There’s no way an original debt of that amount could mushroom to Dh200,000 in 20 years.

What are the implications now that 22 years have passed? Can the bank enforce this debt? I now live in the US where I am retired and I cannot afford to pay Dh200,000. When the call came through from the collection agency, I felt the caller was not representing the bank and was just attempting to extract money. I hung up after they asked for further details. I don't intend to return to the UAE but I might visit the GCC in the future. Would this be a problem? Do debt repayments have a time limit on them? SK, US

Debt panellist 1: Shaker Zainal, head of retail banking at CBI

To avoid a situation like this, residents must always get in touch with their bank before leaving the UAE. You should also review the latest account and credit card statements, fully pay any outstanding debts and get clearance letters to verify you have no residual debts. The Al Etihad Credit Bureau did not exist before 2014, but today it is also possible to validate your outstanding UAE debts from your Credit Report, which you can access anywhere via its app. When you leave the UAE, unless an account is closed, it is also important to update your address and contact details, so that banks can continue to communicate with you once you have departed.

A limitation period is the period of time within which an aggrieved party must bring a claim. A claim or legal action may be time-barred if not brought within the allocated time frame. UAE’s laws and regulations regarding civil transactions contain general rules relating to the limitation period. In general, a claim is time-barred after 15 years, unless a specific provision indicates otherwise. However, there are many exceptions to this rule.

It is also highly unlikely that the bank did not pursue any action against you during the limitation period. Banks generally apply a variety of debt collection methods, including the use of external debt collection agencies and pursuing legal action against defaulting customers, in addition to usual in-house collection efforts, as soon as any loan becomes overdue.

You should get in touch with the bank and ask for full details of your case. Since it has been over 20 years, the bank must have fully written off this receivable. In addition, you are outside the UAE. These factors will increase your chances of reaching a mutually acceptable and fair settlement with the bank, which may also agree to waive some of the outstanding receivables.

Whether or not you are likely to face any problems when travelling to the UAE in the future will depend on the legal status of your case. If there is a police case or criminal court ruling against you, you are likely to encounter problems. This is another reason why the best option is to engage with the bank and gather all relevant background and facts first.

Debt panellist 2: Ambareen Musa, founder and chief executive of Souqalmal.com

There's a pre-specified time limit for legally recovering debts in most developed countries. For instance, in the UK, this limitation period is set at six years, meaning the lender has six years to chase most unpaid unsecured debts. The Statute of Limitations in the US allows creditors to sue borrowers for unpaid debts between three to six years from the last date of activity on the debt account.

It is understood that Civil Law in the UAE limits the debt recovery period to 15 years. After this period lapses, the lender cannot file legal charges against you in a bid to recover the debt. However, it is important to understand that the debt will continue to exist, even if it is rendered legally unrecoverable. The lender can still take you to court, even though the above-stated time limitation will restrict them from securing a favourable judgement. This effectively means that debt collectors can still chase you to recover much older debts, and a police case can still be filed against you. This will make it extremely risky to travel to the UAE or even pass through the country on a layover.

While a phone call from debt collectors 22 years after you left the UAE might seem completely out of the blue, it isn't entirely surprising looking at how debt collection works here in the country. Your debt may have recently rolled over to this specific debt collection agency or the bank may now be employing more aggressive measures to recover older debts.

It would be a good idea to hire a local legal representative in the UAE, who can access your credit report and chase the credit card company to obtain your credit card records and repayment history. It is unlikely that an outstanding credit card balance of Dh5,000 could have grown to Dh200,000 even after 22 years of non-payment. Your legal representative can help uncover how the bank arrived at this figure and how a more reasonable settlement can be reached.

Debt panellist 3: Keren Bobker, an independent financial adviser with Holborn Assets

I have not heard of a bank contacting a person some 22 years after a payment default. You appear to recall which bank you had the credit card with, so contact the lender for clarification. Banks will often pass on issues to debt repayment agencies if they cannot trace a debtor. As in most countries, the UAE has a period of time in which claims can be made and Law No. 5 of 1985 Regarding Civil Transactions contains general rules in respect of limitations and this is usually a period of 15 years. This is in respect of taking a case to court but it could be argued that it is unreasonable or even unlawful to start pursuing a case after a period of 22 years.

What we don’t know is whether the bank tried to contact you in the interim to advise of the outstanding debt and request repayment. I suspect the additional charges are late payment penalties and interest payments charged on interest. This can build up quickly and to a substantial amount if ignored. The amount requested is large in comparison to an unpaid debt of Dh5,000 but illustrates what can happen if someone ignores a debt.

You need to get in touch with the bank to find out what amount was unpaid and to make a settlement offer to close the case. The bank is highly likely to accept a much lower sum to close the case but before accepting any final settlement ask for proof they have tried to make contact over the years. If a payment was left outstanding, there is probably a police case which means if you try to enter the UAE you would be detained at Immigration.

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 [e-mail]