The Debt Panel: 'Can I defer my debts if I was made redundant and my employer did not pay me?'

The Abu Dhabi resident, from the Philippines, is now fighting her case in court but is missing payments because she is too stressed to work

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I have two loans, both of which I have been paying regularly to date. However, I was terminated from my job in February last year and have filed a case against my employer. I was dismissed because they could no longer afford my salary (I was earning Dh8,000 working in the medical profession), however, they had not paid me for several months and they owe me flight tickets, annual leave pay and a gratuity. The court decision to settle my case was delayed because the judge was unwell, so I have to wait a month or two to get paid. I asked both banks for a deferment on both loans but the request was rejected. I have heard how nasty bank collection agents can be and how they create police reports on those that default, so I am scared of missing a payment. In total I owe:

Loan 1: Dh7,544 (monthly payments of Dh232)

Loan 2: Dh24,162 (monthly payments of Dh1,100)

I took out the loans to help sustain my stay in the UAE and for an emergency flight ticket back to the Philippines for a family issue. I have paid both banks until this month but I am now bankrupt and staying with a friend. At one point I did get a new job with a higher salary, but I left before my visa was transferred as I could not function; all I could think about was the labour case.

Once I receive the settlement, I plan to pay off both loans in full. I believe I will get justice in the court because I worked hard and I deserve to get paid, but I need time to pay off these dues. I need a deferment of three months; this will clear up my mind and brighten up my perspective on living. How should I go about securing this deferment? JM, Abu Dhabi  

Debt panellist 1: Kunal Malani, head of customer value management at HSBC

It is good you have been meeting your financial commitments until now, which may strengthen your case with your bank.

Given you have been current with your monthly payments so far, the best option you may want to consider is to continue engaging with the bank and trying to speak to senior management to afford you a temporary deferment. You may want to consider providing them with copies of documentation from your ongoing court case and a written guarantee confirming your intention to pay the bank’s dues with the settlement money.

While I appreciate that you are hopeful of a positive outcome in your favour with the court case, for a more long-term solution to your problem, I would advise securing a sustainable monthly income through a job.

You mentioned that you managed to secure a job with a higher salary but could not concentrate. It is understandable you are emotionally distressed with these issues, however, it is in times like these that you need to be stronger and persevere. With a monthly salary of Dh 8,000 plus, and assuming you have contained your monthly expenses to minimum, you may be in a position to furnish a Dh1,332 monthly repayment relatively comfortably. Secure a job, even if part time, to help you with your financial situation. All problems seem insurmountable at first, but if you are committed to finding a solution, with a little bit of courage and consistency you can beat all odds.

To further reinforce your discussions with the bank, if possible consider arranging to dispose of any personal assets you might have either here or back home in Philippines to help contribute to repaying your obligations.


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Debt panellist 2: Keren Bobker, an independent financial adviser with Holborn Assets

I am sorry to read that your ex-employer is being unfair and not paying you the money you are owed. This has put you in a difficult position through no fault of your own.

Compared to many cases I see, the Dh31,706 you owe with monthly payments of Dh1,323 is not large. It is also commendable that you have managed to maintain the payment for so long despite not having an income. While defaulting on a credit agreement is a serious matter, a bank will not pursue a police case until three repayments have ben missed. Sadly, some do employ unpleasant tactics to encourage late payers to repay their debts.

How a bank will react to a deferment request will vary depending on the bank and even the member of staff you speak to and how much authority they have. Most personnel that a customer comes into contact with do not have the authority to permit such a course of action, therefore they will automatically say no. When you approached the banks, did you inform them that your employer owes you money and that it is an amount that would repay the debt in full? Was any proof of the court ruling shown to them?

Try to speak to more senior staff at the banks and produce evidence of the money owed to you. Naturally there are no guarantees they will be amenable, but supporting evidence will help. If you are seeking work, then proof of a new position will strongly support your request. Indeed, without this I would think it unlikely any bank will be helpful, even with copies of court papers as payment from employers can take a long time to come through.

Banks are simply interested in recouping the money that they lend and the more evidence you can provide as to the strength of your position the better.


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Debt panellist 2: Rasheda Khatun Khan, a wealth and wellness planner

Redundancy together with not being paid your rightful dues is unfortunately a far too frequent problem. It's simply unfair. However, relying on what you may or may not get to pay back debt is not a good move; if you do not receive what you are expecting, the only person it will affect is you.

Firstly, get all communication with the bank in writing including all of your requests for deferment and your explanation of your circumstances and the banks responses. Make sure everything is documented. This way conversation with the banks are clear between both parties. Go into the bank and speak to a manager with all the records of communication you hold. Explain your situation and let them know it's a matter of time with the dismissal case and also that you are actively seeking another job. This willingness to resolve the problem and make repayments will hold well for you if a case is filed.

In the meantime get your thoughts and mind together. Use your frustration and fear and convert it to fuel drive and determination to get out of this situation. You have to find another source of income/employment. Create daily affirmations to keep you motivated and get back on the search for work. Make a promise to yourself that you will do what it takes. Ultimately you are responsible to find a way out of this. Also ask your family and friends for help with your temporary cash flow problem.

Staying out of debt is as important as getting out of debt. Review your lifestyle costs and reduce them if your income does not cover it. Taking on debt to sustain your lifestyle in the UAE is how you ended up in this mess. Go through your expenses to ensure that you can afford the lifestyle you want to live. This way when looking for a job you will know what is the minimum income you need to continue living here.

The Debt Panel is a weekly online column to help readers tackle their debts more effectively. If you have a question for the panel, write to