<em>I am from Syria and have lived in Dubai since I was a baby. I am 42 and have worked as an admin assistant and office manager for 23 years. In 2009, I lost my job due to the financial crisis. At the time I had some loans and a credit card but luckily I arranged settlements with the banks, so my case never ended up in court.</em> <em>In 2013 I was diagnosed with cervical cancer. My company health insurance did not cover the cancer treatment so I signed up for loans and credit cards to pay the medical bills. I then lost my job in January 2015 because of my absence and I was out of work for eight months. That was when the banks started calling me to get their money back. Thankfully, one credit card was paid off by insurance based on my medical report. The rest of the banks agreed on settlements, with another bank, for example, agreeing a monthly rate of Dh1,500 until 2028. I am still repaying that and have an outstanding amount of Dh140,000. </em> <em>I secured another job in September 2015 and was paying my dues on time, then in January my father died and as well as struggling with grief I was totally broke. But I kept up with the loan repayments to avoid the settlement being cancelled.</em> <em>My fortunes changed a little in June when I joined another company. In August I decided to visit the Al Etihad Credit Bureau to check my credit score, which was previously 300. I was surprised to find it was at 698. So I decided to apply for loan but four banks rejected me, including the bank where my salary is credited, because of my history as a defaulter. </em> <em>I want to take out a Dh30,000 loan, so how can I make that happen? I don’t want to wait five years for my report to clear, as I am now taking care of my mother following my father’s death. To add to this, my cancer is back again and the insurance only covers 10 per cent of the treatment. I am not able to take time off for the treatment as I am a new employee.</em> <em>My salary is Dh12,500 and I live with my mother and my brother who works but has a car loan. My monthly expenses come to Dh8,200 and include the Dh1,500 for the loan, Dh2,000 for the domestic helper’s salary (she helps to care for my mother who has had five heart attacks), Dh700 for phone bills, Dh500 for transport, about Dh2,000 on groceries and Dh1,500 on my mother’s medical bills. The rent of Dh70,000 a year and the utility bills are paid by my brother but his job is also under threat. </em> <em>I don't have any outstanding bank debts, apart from the Dh140,000 I owe on the bank debt. That will be paid off in 2028. I need the Dh30,000 because I owe that amount to friends who helped me out when I was jobless. The money would also cover mine and my mother's visa as we are sponsored by my bother. I hope to get the Dh30,000 as soon as possible to ease the financial mess we are living in since my father passed away. </em><strong>NF, Dubai</strong> You are dealing with challenging personal and financial circumstances. Amidst your health problems and work commitments, it is commendable you have managed to negotiate with your lenders to work out a repayment plan for all your outstanding debts. From the details of your restructured loan repayment, it appears you managed to stretch the repayment tenure on your loan to 13 years. While this made your loan installments smaller and took away the urgency of paying back your lender, it has also significantly multiplied your original debt. Over the course of your revised tenure you would be shelling out nearly Dh100,000 on interest payments on your original outstanding balance of Dh140,000. It may seem manageable to put away Dh1,500 towards your installments every month, but this will add up over time and sabotage your potential savings. Based on the list of your monthly expenses including the loan installment, you're spending about Dh8,200 on all your recurring financial obligations. That means you're still left with Dh4,300 at the end of the month. Even after saving towards an emergency fund, you could potentially afford to repay a bigger installment to get rid of your loan sooner. Speak with the lender to see if you can make this repayment plan less expensive in the long run. If restarting the negotiations all over again seems daunting to do on your own, use a professional debt management or debt counselling company that can renegotiate with the bank on your behalf. As to procuring an additional loan of Dh30,000, you've already witnessed how difficult it is to get an unsecured loan with a credit default on your record. It may be worth pushing a bit further when negotiating with potential lenders. Take your credit report along and ask if you can speak to a senior bank representative. You may be able to crack a deal, but since banks would view you as a high-risk borrower, you must be prepared to pay a higher-than-average interest rate. A lot has happened to you in the past 10 years, and you have done well by staying determined and headstrong. It is good to know that you have been keeping up with the repayments of your debt, but as you have learned, your bad credit history has negatively affected your chances of obtaining a loan. Banks conduct rigorous due diligence in assessing the debtor’s eligibility for a loan. In their assessment process, they look at several indicators including the AECB report that evaluates your full financial position based on your credit history, salary and your ability to pay back your debt obligations. Late payments, and being in arrears typically have a long-term impact on your score. In addition, banks also have an internal scoring model based on the information you provide including employment details (i.e. designation, job tenure, salary). Therefore, despite the high credit score you have obtained, lenders may have considered other criteria for their decision. In your situation, incurring further debt obligations is not ideal. The best approach is to focus on proper fiscal management that includes strict budgeting and prudent expenditure. Together with your brother, try to find ways to cut back on spending wherever possible. You can also ask your friends if they can give you more time to settle your debts until you are in a more stable financial position. In addition, try to find opportunities to boost your income by asking for a pay raise or finding a new job with a better salary and better insurance coverage for you and your family. Financial stress certainly impacts your health in a huge way. Therefore, it’s really important to separate your own healing from the money stress. Easy said than done I know, however it’s imperative. Give yourself time each day where you literally ignore the financial stress and focus on your own body and healing. High levels of stress make it very challenging for the body to heal and can result in further tension and even physical pain. Detach yourself from those stressful thoughts when you can. Now for the money part. Taking another loan is not always the answer. Consider other ways to raise the money you need and reduce your expenses even further. You may find a bank that can offer the loan based on a higher interest rate, but before you take that option, carefully consider your affordability. Work out how much you can actually afford to repay on a monthly basis considering your other expenses. Make sure your budget includes putting money into an emergency fund. There will always be expenses that turn up and without the means to cover them you will find yourself needing another loan. So don’t exceed your affordability by taking on an additional loan. In terms of reducing your expenses, consider who else can support your mother? How can you share the expenses? Do you have assets you can sell to reduce your debt? If so consider that too. Anticipating future expenses is really important. Without this back up, it’s really challenging to come out of debt. And remember take time to focus only on your healing. <em>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</em>
