My husband and I lived in Dubai for 10 years until we had to leave last March after my husband lost his job. We both worked in the airline industry and my husband was made redundant in November 2016 due to losses his company was incurring. We had debts to pay off and at first we managed to continue paying our dues using the settlement my husband received from his company. We left Dubai to return to Mumbai in India because our visas had expired. But neither of us could secure a job in India and a year on we are receiving calls from banks. They want us to pay off the outstanding amounts, however, we do not have enough funds to do this. My husband has been in constant touch with the banks, assuring them we are willing to pay the debts once we have the funds or can get a job. We have no credit cards but owe Dh54,000 on a car loan and Dh200,000 on a personal loan. The loan was taken to set up a website that my husband was going to run with his friends, but then we had to use it towards our expenses when my husband lost his job. We are now staying with family and managing on our savings.
Can you guide us on how to negotiate a lower settlement with the banks? Would the banks agree to waive off part of our loan? A case has been filed against my husband for the car loan but the other bank has not filed yet. We are trying very hard to secure jobs either in Dubai or India but have not succeeded yet. It may also be difficult for my husband to secure a job in Dubai due to the court case. What do you advise? SP, Mumbai
Debt Panellist 1: Philip King, head of retail banking at Abu Dhabi Islamic Bank
It is entirely reasonable that banks are pursuing you for the Dh254,000 that you owe them. This is a considerable amount of money and you have to understand that when you take out credit, it’s not free money and you have a legal obligation to repay what you borrow. While banks are often willing to be flexible in terms of repayment programmes, for customers undergoing exceptional circumstances, they cannot make full exemptions and begin to waive off loans. As well as the significant financial cost this would have on banks, it would send completely the wrong message to the market and encourage further delinquency.
At this point, given your track record, banks are unlikely to provide a consolidating loan as there is a history of missed payments and you and your husband have left the country with significant liabilities. You should have talked to your banks before absconding to explain your situation. Even now, proactive dialogue remains your best option. It will depend upon the banks’ policies and procedures as to what their response is to your requests. Before they consider options to assist you, I imagine they will want to see a commitment that you intend to repay the loan in full. This must include with a clear picture of the sources of income you have and when you can make repayments.
I hope you sold off your car before you left the country and any other assets that would raise financing to help repay your debts. Selling non-essential assets to raise funds and finding employment should remain your priority over the coming weeks and months.
Debt Panellist 2: Ambareen Musa, founder and chief executive of Souqalmal.com
Staying in touch with the banks after moving away and making your intentions to repay the debt clear was the right thing to do. Now, it is important to keep the negotiations active and arrange the financial resources to meet your debt obligations, if you're to get anywhere close to finding a solution to your problems.
While no bank would waive off the principal, they could be willing to waive off a portion of the interest as well as the accumulated late payment penalties. There is a higher chance that they would agree to this if you can offer to pay a lump sum amount up front to settle the debt. Have you considered liquidating any existing assets or tapping into your savings? If not this, can you request your close relatives to extend an interest-free loan to you? Getting access to some cash right now can help you pay off both your loans, so that you are done with the debt once and for all.
If a lump sum settlement is not a possibility for you, negotiate with the banks to get the loan tenure extended. With such an extension, your installments can be spread out further, and your monthly commitments can be brought down significantly.
But first, you will need a regular flow of income if you are to pay off your liabilities. Have you considered securing a job outside the airline industry? Think of it as a transitional job, one that can help you tide over financially, until you find something more stable and apt for your career.
Whichever way you steer the negotiations, you will have to be persistent and follow up regularly with the banks. Be sure to keep a record of all your communication with the banks and get any final agreement in writing. Once you've paid off the dues in full, make sure that you obtain a ‘No Liability Letter’ from the bank and a confirmation that any pending court cases have been withdrawn.
Debt Panellist 2: Rasheda Khatun Khan, a wealth and wellness planner and founder of Design Your Life
It is great that you have kept in touch with the banks and have the intention to settle your dues. Willing and intent is very important in the process of clearing debt. Make sure you have all communication with the banks in writing, especially your requests to settle and your willingness to repay. This will hold you in good favour if it is presented at a court.
There are two elements to this:
1. Securing an income source:
If you have any income coming in at all, you must set aside an amount towards paying off your debt. Do you have family or friends that can support you to either find employment and/or raise funds in the interim? If you have assets such as land, property or savings you need to consider liquidating them to reduce the debt. What's important here is that you have something to give to the bank before you can ask them for a restructure. This way the bank will be more willing to consider your case.
2. Agreeing a repayment structure
If you are currently receiving an income then review your expenses thoroughly to come up with an affordable monthly repayment that you know you can fulfill over the given term. It's important to be able to propose a solution of how you can repay what is owed.
You can attempt to do this yourself as a first approach. Put together a proposal to the banks which includes the reasons why you were unable to make the repayment, an initial lump sum payment amount towards the loan, a full income and expenses breakdown showing how much you can afford to commit to as monthly repayment and a request to freeze the ongoing charges, fees and interest. Keep a written log of the communication back and forth.
If you are in a position to appoint a lawyer to act on your behalf, this is the next step. As your legal representative they can also help in the negotiation with the bank for settlement and restructure. To end the cycle of debt, you and the bank need to agree a monthly repayment that you can actually afford to commit to over the whole term otherwise you will find yourself increasing your debt not reducing it.
If you do secure employment in the UAE, have a lawyer look into the implications of you reentering into the country and settle any pending cases to ensure your safe arrival.
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