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My immigrant visa for the United States was recently processed successfully, as my wife is a US citizen. I now have five months before I need to leave the UAE. However, I have a loan in my name on which I owe Dh190,000 that needs to be repaid before I exit. I do not have any other debts. Is it possible to repay my loan from the US every month? There is no way to delay my exit from the UAE as the US immigration process is complete and I must settle there by the end of October.
I initially borrowed Dh210,000 in November to consolidate a few debts – credit cards and a home lease loan that I had topped up. The monthly repayment is Dh5,000 and I earn Dh11,000 a month working in IT in Abu Dhabi.
I’m scared to leave the Emirates with this amount outstanding but I cannot repay it in full before I go as I do not have the funds. I will be paid a gratuity of almost Dh40,000 when I leave my employer but I need to take money with me as there will be expenses in the US. I have not informed my bank about this, as they may restrict my travel. A friend of a friend has been paying a loan from the UK for the past year after being made redundant in the UAE, so I’m hoping to do the same. Should I leave the UAE without informing the bank and then set up this type of arrangement?
I’m also hoping to earn a higher salary in the US. I’ve already had a couple of interviews and I think I may be able to secure $100,000 a year, which equates to about Dh30,000 a month.
I don't want to be a defaulter as I have a very good track record with the banks here and have never had any legal issues. I also want to visit the Emirates as my parents and brothers are Abu Dhabi residents. Although I previously had Pakistani citizenship, I was born in the UAE and have lived here for 35 years. I want to clear my debt, so how can I achieve this from the US? PI, Abu Dhabi
Debt panellist 1: Ambareen Musa, founder and chief executive of Souqalmal.com
Leaving the UAE without informing your bank and figuring out the repayments later may seem like the easy way out right now. However, it could get you into trouble with the bank and may even adversely affect your creditworthiness in the UAE.
Once your final salary and end-of-service benefits get credited into your account, the bank will be prompted to freeze the funds in your account until it is reassured there's no risk of loan default. The idea behind this is to deter borrowers from absconding and leaving a trail of outstanding debts behind. To avoid this mess altogether, keep your bank in the loop.
From a practical point of view, you can repay your loan from overseas. But since it is very difficult for UAE lenders to enforce their loan terms and guarantee regular repayments when a borrower is based elsewhere, your bank may demand immediate and full repayment of the loan.
As most of your family is here in the UAE, you could consider appointing a financially sound family member as a loan guarantor. However, you will have to discuss this with the lender first; the bank is under no obligation to accept a personal guarantor in this situation. If this solution works out, it would be easier for you to negotiate a mutually acceptable repayment plan with the bank.
You could also use your gratuity and end-of-service benefits to partially offset the loan. If you're able to secure a job in the US and can provide the bank with verifiable details and documents about the new employment, you may be able to negotiate an overseas repayment plan – although that's completely up to the bank.
In the worst-case scenario, tap into your savings, liquidate some investments or rope in your family members to help you out with an interest-free loan to settle your UAE debt. The bank may also offer you a good deal in the form of an interest waiver or by lowering the final settlement amount if you offer to make a lump-sum payment.
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Debt panellist 2: Shaker Zainal, head of retail banking at CBI
Even after you leave the UAE, you are allowed to maintain a “non-resident” bank account and there are many UAE banks, which provide this service to their customers. Typically, a non-resident account will not give you all features offered in a “resident account”, so they tend to be more restrictive. For instance, most non-resident accounts do not offer a chequebook facility. However, this should not be a problem in your case, based on your likely needs.
You do have an obligation to inform your bank when your residency status changes, so that the bank can change the status of your account from a “resident” to a “non-resident” account. Due to the different treatment of these accounts, it is important the bank has up-to-date information on your residency status at any point in time. Your notification obligation is usually documented in the banking services agreement that you have signed at the time of opening your bank account.
Since you also have an outstanding loan, you have another obligation to inform the bank of the change in your employment status. Again, most banks have specific terms and conditions included in the loan agreement signed by customers, establishing this requirement clearly.
In light of your contractual obligations, it is advisable you do inform your bank of the changes in your status and circumstances and discuss a mutually agreeable solution for your outstanding loan.
Be aware that even if you do not inform the bank, when your end-of-service benefit is credited to your bank account, the bank is likely to automatically impose a freeze on this amount, based on the terms and conditions of your loan agreement. Therefore the best approach is to openly discuss your situation with the bank and seek a feasible solution.
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Debt panellist 3: Keren Bobker, an independent financial adviser with Holborn Assets
It is possible to repay a debt from outside the UAE and if you are up to date on payments there is no reason why a bank would request a travel ban. It is however, standard practice for all employers to mark the last payment to you as ‘final salary’ and then for banks to put a freeze on your account. It is also standard for a lump-sum payment to be offset against existing debts to reduce the capital outstanding. If you have money in your bank account you can withdraw this prior to the account being frozen but you will have a problem accessing the final payment if it is all paid to your account.
If you advise your bank you are leaving the country, they could apply for a travel ban if they believe you may default but that takes a few days to organise in most cases. In standard cases a bank cannot register a police case against someone unless they have missed three monthly payments but even missing one, or being a consistently late payer, will show on a borrower's credit report at the Al Etihad Credit Bureau. However, this should only affect future credit requests.
Provided you keep up the repayments once you have left the UAE, ideally without a break, there should be no issue in returning. Many people continue making loan repayments from outside the country and you simply have to arrange to do this with the bank from the US. You are likely to have bank charges in making monthly transfers for the repayments but this is still better than being a defaulter and potentially having an issue returning to the UAE.
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 pf@thenational.ae