I worked as a manager in a five-star hotel in Dubai for 12 years and always had a clean record. My salary was Dh16,000 with some benefits added on. Then my father started a business and was scammed as the company and building was registered under his name. The partner took 3.6 million Pakistan rupees (Dh119,684) from the company, then disappeared. When clients started asking for money from my father, I took out a Dh200,000 loan to bail him out. The day after I sent him the money last September, I received a termination letter due to restructuring of the hotel's management. The scam case is still in court in Pakistan, where I am now based. I have been sending letters to the bank, urging them not to proceed with a travel ban as I'm trying to find a job. So far I have had no success. I also recently flew to the UAE on a visit visa to find a job but the hospitality industry is not doing well at the moment. If the bank proceed with a travel ban, how can I repay them and find a job? In Pakistan, I only earn 40,000 Pakistan rupees a month, which is not enough to pay rent and school fees. What do you advise? FB, Pakistan
Debt panellist 1: Shaker Zainal, head of retail banking of CBI bank in the UAE
You are obviously committed to finding a solution to get out of debt, and that’s a great start.
Under UAE law a bank can take legal action after loan repayments are missed, and it is a common occurrence for banks to request a travel ban to stop someone from leaving the country even if you intend to repay your debt. However, in my experience banks in general always want to assist customers with financial problems and help them make repayments, especially if you are acting in good faith.
You should start by contacting your bank and communicating your intent to repay your debt. Always be transparent about your financial situation to reach the right arrangement, for example, provide the bank with all necessary documentation about your financial situation and your current predicament.
To prove your good faith, even if it’s a small amount and less than your monthly instalments, try to make some monthly payments for your overdue loan, using your income in Pakistan. This will show that you are making your best efforts to try to sort out your problems, with an intention to meet your financial obligations and increase your chances of avoiding a travel ban.
Considering your low income in Pakistan, it makes sense to try to find a job in the UAE, which will enable you to earn a higher income. With your 12 years of UAE experience and good track record, it is a realistic target. If you have assets in Pakistan, you can consider selling them to reduce the amount of money you owe. Think of ways of earning more income. Can you ask for a pay rise from your current company? Can you take on part-time work? Are there any alternative options available to you where you can earn more money and put it towards your debt?
This will give you some time to expedite your job search, avoid any legal issues and increase the time you have to find employment in the UAE.
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Debt Panellist 2: Ambareen Musa, founder and chief executive of Souqalmal.com
It is unfortunate that you lost your source of income immediately after taking on a big financial commitment. Now that you're in Pakistan, you must try your best to come up with the financial resources required to pull yourself out of debt. In fact, if you can offer to make a lump sum payment to settle your loan, the bank could be willing to waive off a chunk of the interest or reduce the overall debt owed.
Do you have any property in your name or your father's name in Pakistan? You can apply for a loan against this property as collateral. You can even consider applying for a loan against gold, which is a popular secured lending product in Pakistan. If you don't have assets that you can tap into or investments that you can easily liquidate, it may also be worth checking with your close relatives if they can extend an interest-free loan to you. The end goal is to use whatever financial resources you can gather to settle your debt in the UAE.
As a borrower, it is in your best interest to use debt responsibly. You took out a loan amounting to Dh200,000, and after using Dh120,000 to help with your father's financial commitments, have you accounted for the remaining principal? If you haven't used up all of the loan, use the remaining principal to offer a partial repayment to the lender. This will reassure the bank of your commitment to paying off the debt, and may stave off any adverse legal action against you.
It also looks like you're having a one-sided conversation with your bank. Instead of simply writing to the bank asking them not to impose a travel ban, you must try to initiate a negotiation with your bank, asking them to offer you a revised repayment plan or a settlement option that works for you. A restructured repayment plan can get you access to an extended loan tenure and waiver of late payment fees, which can allow you to stick to regular repayments without the risk of defaulting.
You mention you have already travelled to the UAE earlier in search of employment, but haven't had any luck so far. Maybe, you should consider finding a job outside of your industry if that's an option, or starting off small and looking for a slightly junior role within the hospitality industry just to get your foot in the door.
Remember, whether you're in the UAE or outside the country, the debt you owe has to be repaid eventually. It is easier to settle the loan in full if you're unable to secure a job here in the future. If not, you will have to find the most economical way to regularly transfer money to the lender to keep up with your monthly repayments.
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Read more:
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Debt panellist 3: Keren Bobker, an independent financial adviser with Holborn Assets
Despite your unfortunate situation, non-payment of debt is a criminal offence in the UAE and even with such extenuating circumstances, the bank will still require payment of monies owed. Once three month’s payments have been missed the bank has the right to take further action. This will usually be a police case and travel ban and not only will these prevent you from travelling in or out of the UAE, it could prevent a new residency visa being issued if you manage to obtain a new position.
The amount borrowed is fairly substantial compared to your monthly income, even if within Central Bank limits at the time, and was rather more than the amount taken from your father’s business. Given the circumstances it would seem reasonable for family to be assisting you with your present difficulties as the debt arose for your father’s benefit and it would be unfair for you to suffer serious consequences having borrowed the money for someone else.
The family need to at least help you keep up the minimum monthly repayments until you are back on your feet financially. Then I hope they would continue to assist, especially if they win the court case. It seems unfair for you to shoulder this burden, and consequences, on your own.
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.
