I have lived in the UAE for 10 years and work as a food safety officer in a Dubai hotel. I am broke and am haunted by banks calling me to pay off the loans and credit card debt I have accumulated during that time. I owe Dh60,000 as I have three loans from three banks and I have four credit cards as well. On top of that I owe a further Dh10,000 to friends and relatives - this has ended with fights and hurt feelings and lost trust. I borrowed the money to renovate my home in the Philippines but as I earn Dh5,000, my liabilities are now beyond my capability to pay. I have missed payments due to lack of resources. I now need your advice. JN, Sharjah
Debt panellist 1: Ambareen Musa, the founder and chief executive of Souqalmal.com
A debt worth Dh70,000 on a salary of Dh5,000 is definitely high. However, with the right mindset and determination you will be able to turn your situation around.
In your case, since you are struggling to repay your monthly debt obligations, a good starting point is to approach the banks and speak to them about restructuring the terms of your loans. This will help you stretch the tenure of your personal loans and lower your monthly instalments. As for the outstanding amounts on your credit cards, these must be increasing due to the high interest rates, so you should talk to the card providers to discuss the possibility of converting these cards into fixed-interest loans, which you can repay monthly.
One way to start is by first approaching the bank where your salary gets credited. This will most likely be the bank that you have a salary-transfer loan from. Discuss with your bank the consolidation of this loan along with some of the credit cards (if not all four of them) especially the ones that are charging a high interest rate. This will help you combine these obligations into one monthly instalment.
To generate some additional income and be able to repay your friends, can you look into finding another job - either a part-time position or a freelance role? Only take this path if it doesn’t violate your current employment contract.
Debt panellist 2: Jamal Alvi, chief credit officer at Abu Dhabi Islamic Bank
Sadly, the level of debt accumulated versus your salary of Dh5,000 per month is unsustainable. This should be a lesson for people never to borrow against their future income to fund current expenses. The importance of living within one’s means can never be overemphasised. The age old adage that “a penny saved is a penny earned” is a sure shot way of staying out of financial trouble. You should have waited to build enough savings to fund the house renovation. Your only option now is to sell some assets (maybe the house back home) to settle this debt and commit to never getting into debt again.
The Debt Panel brings together four financial experts: Jamal Alvi, the chief credit officer at Abu Dhabi Islamic Bank; Ambareen Musa, the founder and chief executive of the comparison website Souqalmal.com; Rasheda Khatun Khan, a wealth and wellness planner and founder of Design Your Life; and Keren Bobker, The National’s On Your Side columnist and an independent financial adviser with Holborn Assets in Dubai. Together they answer queries in a weekly online column to help readers better tackle their debts. If you have a question for the panel, write to pf@thenational.ae.