The Debt Panel: Dubai jeweller says Dh105,000 debt caused by expenses of 'middle class life'

The sole earner for a family of six, the Dubai resident owes Dh105,000 on four credit cards and two loans and says he is surviving on one meal a day.

Illustration by Mathew Kurian
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I owe approximately Dh105,000 on four credit cards and two personal loans. The situation is getting worse every day as I pay fees on any missed payments.  I am the sole earner in a family of six and have a monthly salary of Dh7,750 working in the jewellery industry.  The problem was caused by the day-to-day expenses of a middle class life. Signing up for the credit cards and utilising them has all been caused by me. I used the cards for their cash facility to pay the medical expenses of my father-in-law and my mother, who was suffering from throat cancer. She has now recovered and is living a normal life again. My income covers the debt repayments but leaves little to take care of my family and two children; I only eat once a day. Is there any way I can consolidate the debts into one payment - payable over four to five years - that only takes up half my salary. The other half I could then use to support my family. SS, Dubai 

Panellist 1: Ambareen Musa, the founder and chief executive of

Consolidating your debts or refinancing, which allows you to merge all your debts into one loan, sounds like a magic solution to help you get your finances back on track.  This will take a lot of the stress out of your financial life by reducing multiple monthly payments to just one, which should be lower and more manageable.  But while the debt consolidation loan looks good in theory, it only helps those who will then adopt a sensible approach to their finances. There is no doubt turning a high-cost credit commitment into a low-cost debt is a good way to free up some cash but if you then spend this cash and run up even more debts you will end up in more trouble.

UAE banks offer specific products to settle financial liabilities through unifying your debts into one balance that you can then pay off with them. Obviously, you might have lower cost and more manageable repayments but you have to remember the new loan provider may extend the term you repay that debt over a longer period. So while it gives you more money in the short-term, you might pay much more in interest payments. That's why you need to ensure that the deal you receive on your new loan is really better than your current situation.


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Also, don't forget to check the rate and applicable fees. You should ask the loan provider if the interest rate is a flat or reducing rate because there is a difference and personal loans can be advertised in both. While flat rates are usually lower, they might not be the most cost-effective option because they are calculated on the whole loan whereas a reducing rate is calculated on the outstanding balance. Then you can compare between your options in the market to choose the best in terms of the repayment period and rate. On the other hand, you have to check all applicable fees that may increase the loan cost such as upfront fees for processing your consolidation deal/loan. This is typically 1 per cent of the loan amount.

Finally, remember that a debt consolidation deal is often just a trick to get a standard personal loan. If you had got a personal loan before, you will have a big chance to get approval for refinancing the existing debt anyway, though some of them are stricter on this matter. Whoever the loan provider is, make sure you compare all the personal loan deals in the market and not just the debt settlement offers to find the right deal for you. Also refinancing your debts may create more problems if you don't control and decrease your spending.

Panellist 2: Rasheda Khatun Khan, a wealth and wellness planner 

When do you ask yourself if it's time to leave the UAE? I mean we all know it's not a place one can retire, so let's start by asking ourselves why we came to the UAE in the first place? To achieve what?

Most of us will answer, "a better life and to be able to save". So when this stops being the case, when is it time to leave? If the numbers don't add up anymore, it's time for you and your family to move on.  To put it another way, if the cost of your lifestyle is more than your salary, even after you have cut back on your costs, then staying is no longer workable. Your only other option is to get into debt, as you are already demonstrating above, and debt can become astronomical in a very short space of time if it is not controlled. Living here is simply not worth getting into huge debt over.

SS, you need to consider some serious ways to cut back. Perhaps send your family back home for a period of time. Eating once a day will only have an effect on your health and therefore increase your costs more. Cut back on things that will not affect your health, like rent, schools fees and travel.

Have you approached your bank for a consolidation loan? Start with the lenders that you hold your credit cards with. You may not be able to consolidate all debt into one loan but you may at least be able to consolidate the credit cards on to one or two loans.

Also look up debt consolidation companies in UAE. Approach them for help in reducing your monthly commitment. Look at this option from your home country too. Maybe a bank there will consider consolidating the credit cards for you. Explore support from family and friends as well.

What's important here is to establish if the debt will stop increasing. There are two key things here: firstly, stop adding to the debt and ask if your current living costs are increasing your debt every month? Secondly, repay the debt in affordable repayments. Tackling each of them - one at a time if necessary -  is the only way to get out of this situation.

It really is time to do a reality check. The cost of living in the UAE certainly has increased pushing out the lower income brackets. For those not quite in the "drowning in debt" situation, ask yourself if it is still feasible for you and your family to live here. Remind yourself why you came to the UAE in the first place and if your not able to fulfil that initial goal, then perhaps it is no longer for you.

Debt panellist 3: Michael Routledge, the founder of

Firstly, well done for taking the first step in the process of addressing and resolving your debt issues, debt is often a taboo subject and therefore is seldom discussed. You are one of thousands in the UAE with an unmanageable amount of personal debt , and I'd urge everyone to discuss their debt issues openly where possible with friends, family, or within communities of like-minded people in the UAE.

Accepting that you've gotten yourself into this position and deciding to address the issue is a big step in the process of becoming debt free. When I first realised that I was struggling with debt, I spent the next period of my life thinking that I was a victim of the banks and that the banks should have known better than to lend me so much money. Once I accepted that I needed to take responsibility for my actions, it gave me the motivation to remedy my situation and I began my journey of becoming debt free.

As your debt burden ratio (DBR) is greater that 50 per cent, you may not qualify to receive a consolidation loan from a bank, given that the UAE Central Bank enforces a maximum 50 per cent DBR which the banks can check with the Al Etihad Credit Bureau (AECB) when you apply. There are debt rescheduling services available who will charge a fee to discuss your situation with your creditors on your behalf. However, as you're already in debt I would never advise that you pay thousands of dirhams for a service you can easily do yourself.

During our discussions with lenders within the UAE, one of their issues with debt rescheduling is with transparency. I would advise that you document your income, expenditure and debts on a statement of accounts (SOA) form to clearly show your current financial situation. This form can be downloaded from our site along with a guide to help you complete the form. I would then advise that you apply for your credit report from AECB, which can be used to back up the information you've included in your SOA.

Once you have completed the SOA and are in possession of your credit report, make an appointment to meet with the collections department of your lenders and present the evidence to them and negotiate a repayment plan which you can afford.

As I'm sure you will understand, as with any other business, lenders offer credit to consumers to make money, so you should expect that the negotiation will not be the easiest process you've ever taken part in. However, in my experience being part of this process will help develop your knowledge of debt and should help make sure you don't get yourself into this situation again in the future.

Having been in your situation I can relate to the pressure you're currently under, and I'd be more than happy to assist you through this process.

On this panel this week: Ambareen Musa, the founder and chief executive of the comparison website; Rasheda Khatun Khan, a wealth and wellness planner and founder of Design Your Life and Michael Routledge, the founder of the debt advice site The Debt Panel is a  weekly online column to help readers better tackle their debts. If you have a question for the panel, write to