The Debt Panel: Dubai couple want to consolidate their Dh285,000 liabilities into one payment

The husband and wife are struggling to manage their debts and are looking for a 'combined structuring' option

Illustration by Mathew Kurian

My wife and I both work for reputed companies in Dubai, earning Dh8,000 each. However, we have debts of Dh285,000 between us; my debt burden ratio is higher as I owe about Dh160,000, while my wife owes about Dh120,000.

My debts are:

Card 1: Dh7,450

Credit card 2: Dh4,500

Credit card 3: Dh10,100

Loan 1: Dh67,000 (monthly payment of Dh2,510)

Loan 2: Dh56,000 (monthly payment of Dh2,084)

Loan 3: Dh17,700 (monthly payment of Dh950)

Total: Dh162,750

My wife’s debts are:

Card 1: Dh4,500

Card 2: Dh2,500

Loan 1: Dh63,000

Loan 2: Dh7,700 (monthly payment of Dh750)

Car loan: Dh45,000 (monthly payment of Dh950)

Total: Dh122,700

We accept our mistakes. I took out the first loan to get married, then my younger brother had unexpected surgery and I supported him. When my wife moved to the UAE from India to work with me 18 months ago, I took out a Dh30,000 loan as I was not aware of family expenses. I wanted to keep it for security but it disappeared over time. My wife got a job and then took out a loan to pay off my cards but it went on her mother’s medical treatment instead. We then used credit cards to meet our monthly payments, which has led us to this trouble.

We are trying to repay our debts now but finding it hard with all the split bills. Ideally, we would like to consolidate our debts and salaries into one account, however, no bank is willing to help us with combined structuring – something that is done in the US. 

The banks say our payment history is good and if we can manage the payments, why do we need consolidation? However, although we have stable incomes, it is difficult for us to cope with the payments and regular charges from the bank. I have missed some payments, but my wife is always on time. Our monthly expenses include rent: Dh3,500, groceries Dh1,500, transport Dh1,200 and other expenses Dh500. 

Do you think any debt consolidation team in the UAE would structure our debts so that we could have fixed payments to clear everything? We are in the mid-stage of our careers – me as a business planner and my wife as a software engineer - so we expect to get promoted. AR, Dubai

Debt panellist 1: Shaker Zainal, head of retail banking at CBI

The good news is that both you and your wife are employed and have a regular income. This is the most important factor that impacts any borrower’s creditworthiness, from a bank’s perspective.

Credit cards tend to have higher interest rates, and by making minimum payments, you are already incurring high borrowing costs. If you continue to make minimum payments, your total outstanding card debt will increase exponentially and put more pressure on your finances. Your first priority should therefore be to reduce your cards outstanding, and the easiest way to do this is to seek a new personal loan, with a long enough tenure to reduce your monthly payments.

Since your wife has not had any overdue payments, she is likely to have a good track record with the Al Etihad Credit Bureau. I suggest she seek a new personal loan to consolidate your debts. She can approach the bank, where her salary is paid to, and make a loan application with an appropriate tenure and payment plan.

Secondly, you may consider applying for an advance salary payment to both of your employers. Since you are entitled to receive an end-of-service benefit at the end of your employment with your employers, they may accommodate your advance payment requests, particularly if you have been working at the same company for a while.

Finally, selling assets back home or in the UAE is always another option to reduce your temporary financial distress. For instance, if the cash proceeds from the sale of your car is Dh75,000, this would give you a surplus of Dh30,000 after paying back your outstanding car loan of Dh45,000. You can always buy another car in the future, once your finances are back on track.

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Debt panellist 2: Ambareen Musa, founder and chief executive of Souqalmal.com

Have you approached all your lenders and card providers to discuss the debt consolidation option? Since you have multiple loans, this may be worth a try. While not all banks offer this facility, the eligibility criteria vary from one bank to another. Transferring your salary to the bank offering debt consolidation is a prerequisite, so you and your wife must be willing to do so.

If a typical debt consolidation does not work out, try to have your debts restructured instead. This could involve an extension in loan tenure, lowering of the interest rate, as well as waiver of late payment penalties. A short-term solution could be opting for a payment holiday if the lender offers this. This could give you both some breathing room while you focus your resources towards getting rid of your outstanding credit card debt.

If negotiating yourself does not secure the results you desire, enlist the help of a professional debt counsellor or debt management agency. Agencies in the UAE like Credit Expert and Lotus Loans & Overdues Rescheduling Services can negotiate with your lenders and card providers on your behalf. Their services are available for a fee, so make sure you enquire about these fees, service terms and what results you can expect before signing up.

You and your wife should also focus on some strict budgeting to help you save more of your joint income. Think about moving to a more budget-friendly accommodation, downgrading to a cheaper car or swapping your car for public transport etc.

Coming to the income side of things, could you approach your employer to request a raise or maybe a few months' salary in advance. This may be easier if you've been working for the company for a few years now. Otherwise, moving to a better-paying job or taking on some additional part-time work could get you the much-needed extra cash to resolve your debt woes.

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Debt panellist 3: Rasheda Khatun Khan, a wealth and wellness planner and founder of Design Your Life

Living outside your means is a guaranteed road to unmanageable debt. If you consistently spend more than you earn, you will soon owe more than you can repay back. It always seems easy to manage at first and the art of juggling money comes to play.

Debt consolidation can only resolve your current situation if you have changed your spending behaviour. When you just consolidate without altering your spending patterns, you are simply buying yourself time until the next consolidation loan is needed.

Your first step must be to sell your assets. If you have any property, land, car etc, it's time to cash in. Downsize everything you can, cut all luxuries out and pay down as much of your debt as possible. Call on your family and friends for support; whatever terms of repayment you arrange with them, make sure it is truly affordable to you, otherwise you compromise relationships.

If you are able to secure a consolidation, place limits and boundaries on your future spending to ensure you can truly get out of this situation once and for all.

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]