The Debt Panel: 'Can I repay my UAE debts from the UK?'

The Filipina nurse plans to relocate to secure a higher salary but is concerned about leaving liabilities behind

Illustration by Mathew Kurian

My contract ends soon and I’m planning to return home to the Philippines before relocating to the UK when I can secure a new job. My problem is that I still have an outstanding balance on a personal loan and active credit cards. My plan is to pay my remaining balance from the UK. I raised this dilemma to one of the lenders and they had no issue with my plan to repay the debt from another country, however, I am still worried that I might be held at the airport when I exit. My debts are:

Personal loan: Dh86,305

Credit card 1: Dh5,000

Credit card 2: Dh8,000

Total: Dh99,305

I applied for the Dh100,000 loan a year ago to settle other bank debts such as credit cards and some personal needs in the Philippines. To date, I have made all the payments on the loan as well as the credit card debts on time but sometimes I can only the pay the minimum amount on the cards.

When I leave the UAE, I’m eventually hoping to secure an opportunity in the UK, as that offers a higher salary. Here I earn Dh6,000 a month plus overtime but in the UK I can earn more. 

I told my bank they can take my gratuity as partial payment for the loan, which should come to about Dh10,000 to Dh12,000. I visited the bank branch twice and they said they have no problem with me leaving the country as long as my husband continues paying. My husband also works here and I want him to be the guarantor. However, the bank says it does not implement the guarantor process at its bank. My husband earns Dh3,500 and is planning to stay here for two years or more. My concern is, can I leave and then return to the UAE safely without incurring a travel ban? KF, Dubai 

Debt panellist 1: Philip King, head of retail banking at Abu Dhabi Islamic Bank

Banks in the UAE are allowed by law to place a travel ban if they have reason to believe that the borrower could default or abscond from the country without paying their outstanding debt.

Once you are in a position of financial strength in the UK, you may also consider making a lump-sum payment to free you from your financial obligations.

You have made the right decision to inform your bank about your plan to relocate and intention of making further repayments from abroad. This shows that you are fiscally responsible and committed to clearing your debt.

While the bank representative has approved your request, it is important to obtain a written record of this agreement. This provides you with concrete evidence that you have come to an amicable resolution with the bank.

The letter may include details of your outstanding debt, the settlement plan and your contact information, as well as your husband’s details.

Once you are in a position of financial strength in the UK, you may also consider making a lump-sum payment to free you from your financial obligations. Start by paying off your cards which will be charging a higher rate.

If repayments are being met on a timely basis, the lender will not have any cause to take action and you will not incur a travel ban.

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

Leaving the UAE with debts is not necessarily a problem and I am pleased to see that you have every intention of repaying the money that you borrowed.

A bank cannot put a travel ban on an individual but if they have concerns that someone will leave the country and not repay their debts they can apply to the courts for a ban. This is not granted automatically and the bank has to make a case for the ban. If all payments are up to date and you have been in contact with them about your situation they would not have a strong case. Generally, a bank can only take action against a borrower if they have missed three repayments.

When a bank receives a salary payment marked as "final salary", it is normal for a bank account to be frozen. Many banks will apply this payment, plus any end of service gratuity, against a debt to reduce the capital outstanding. You have stated that you want this to happen.

As your husband is not a guarantor on the loan, he is not legally liable for your debts so the bank cannot chase him for any payments nor hold him responsible. He can make payments to the bank on your behalf without issue.

If you are still concerned that the bank may have taken action, shortly before your departure you can check with the General Directorate of Residency and Foreigner Affairs (www.amer.gdrfad.gov.ae), helpline number 800 5111.

Provided payments are maintained in your absence, there is no reason why you would have a problem re-entering the UAE at a later date.

Debt panellist 3: Ambareen Musa, founder and chief executive of Souqalmal.com

As witnessed in your case, a lender is under no obligation to accept a personal loan guarantor. Because the bank signed the loan contract with you, it will hold you legally liable to repay the loan. If things don't go as you've planned and if for any reason you're unable to keep up with your loan repayments, the bank would initiate loan recovery measures as part of standard protocol. This could involve rolling over your outstanding debt to a collection agency and in the worse case scenario, filing legal charges against you.

However, you don't have to worry about travel bans, police complaints and lawsuits, if you're able to keep making your loan and credit card repayments on time as per your loan schedule. Even if these debt payments are made from overseas, the bank has no reason to take any precautionary action against you.

Based on the details you've provided, it looks like the lender has agreed to let you repay the loan as per the original terms, even after you leave the UAE. However, to secure your interests, it would be a good idea to get this agreement in writing. Assuming your primary bank (the one where your salary gets credited) is indeed the lender in question, such a written agreement would be enough to ensure that you're not stopped at the airport when exiting the country.

Instead of leaving with a loan and outstanding debt on two credit cards, how about you settle and close both the credit card accounts first? The combined unpaid balance on the cards is still fairly low, and using your savings to pay it all off can save you a lot of headache later. You won't have to worry about interest piling up when you make minimum payments or incurring late payment penalties if you happen to miss any.

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]