How can I handle harassment from a bank debt collector? I was meeting my repayments on a regular basis from 2013 to 2015 but then a family member got sick and I was the one financing the treatment. I also used to pay for my sister’s tuition fees back home in the Philippines but she graduated in March so that expense has gone. Since then, I have only managed to pay the minimum amount on my debts. Even if I do make a repayment onto the credit cards, the charges and outstanding amounts keep on increasing. I am not even using the credit card anymore. I work as a claims officer in Dubai and my monthly salary is Dh5,000. My debts are: outstanding / minimum payment
Credit card 1: Dh14,777 / Dh800
Credit card 2: Dh17,857 / Dh800
Credit card 3: Dh19,000 / Dh900
Loan: Dh39,0000 / Dh1,309
Credit card: Dh9850 / Dh800
I have tried to get a debt settlement/restructuring but Bank 1 says it does not offer restructuring to expats. I moved to the UAE in 2013 and borrowed the money to pay for the hospital bills and tuition fees.
My monthly expenses are:
Bills / money sent to the Philippines: Dh1,250
Money owed to other people: Dh1,000
Recently, I've been receiving persistent and annoying calls from an agent claiming that she is from Bank 1’s collections department. One of my credit card payments is overdue by 53 days. I have explained my situation but she keeps on yelling and telling me that she does not care. The agent calls my mobile number and my office number – I have had more than 100 calls over the last week. She is now threatening me with a police case but ’m only behind by Dh1,400. She's not just bugging me, but also my colleagues, who have nothing to do with the bank. She even used foul and profane words, which I do not deserve at all. I know that I owe an amount and I'm going to settle it once I have the resources. I am very upset and fed up with her calls. I went to the bank and told them what happened but they said this agent is from an outsourced debt collection agency. Where can I make a formal complaint about this matter? MP, Dubai
Debt Panellist 1: Philip King, head of retail banking at Abu Dhabi Islamic Bank
As your bank has said, this role is typically outsourced to a specialist company whose sole purpose is to recover what is owed. It appears that the collection agent is overstepping the line of what is fair, particularly given your stated commitment to repay your debt. If the agent continues to persist with this approach, you should register further complaints with the bank as well as directly with the debt outsourcing company. You can also make a formal complaint against the bank and bank collector via the Central Bank. The process to do this can be found on the Central Bank's website.
With your tuition fee expenses now finished, you should use this additional financing to get back on track with your debt repayments. While it’s worth approaching the bank again for a consolidation loan, there is no legal obligation for them to grant you this. Your best option is to repay as much as possible over the next year starting with your credit cards. If you are only paying the minimum on your cards, you will not eat into the overall sum as you are just covering the monthly charges. Ask your friends to postpone the monthly Dh1,000 you have previously agreed and use this money to repay your bank debt, ensuring you pay more than the minimum payment.
Debt Panellist 2: Ambareen Musa, founder and chief executive of Souqalmal.com
Your combined credit card debt makes up over 60 per cent of your total debt. If you leave it unpaid, it can quickly multiply and leave you in a pile of debt that's far bigger than what you're already stuck in. Therefore, you have to make it your priority to get rid of this expensive credit card debt first.
It also seems you have 'debt consolidation' confused with 'debt settlement'. You may not qualify for debt consolidation, but if you can convince the bank that you cannot keep from defaulting on your debts given your financial circumstances, they would be willing to offer you alternative repayment options. Approach the banks again to explain your current situation and discuss how you can pay off the credit card debts.
You can expect both the banks to insist on you settling the outstanding balance in full. While from a purely financial perspective this will be the least expensive, since you pay the least amount of interest, it may not be feasible if you don't have access to a ready lump-sum of cash to make the payments. Your next best bet is to negotiate with the banks to convert the outstanding balance on all the cards into a fixed-interest, fixed-tenure loan. This can help you avoid bleeding money due to exorbitant credit card interest rates, and will lock in a loan-like lower interest rate for a fixed term.
Also, remember that it is easier to negotiate with a bank representative than with a collections agent. The former is more likely to work with you to find a solution to help you pay off the debts, while the debt collection agency will only try to arm twist you into settling everything right away leaving no scope for negotiation.
Since you are struggling to keep up with the debt repayments due to your limited source of income, you must think of ways to cut your expenses and free up some cash to repay these debts. One option is to freeze your remittances, at least temporarily, until you settle your combined credit card debt in full. Since your sister has already graduated, she could find a job to help meet your family's basic living expenses.
Your current salary can only stretch so much. So you must look for opportunities to boost your earning potential. This could also be the right time to ask your employer for a raise, if you have been working with them for a considerable amount of time. If this is not feasible, keep an eye out for job opportunities that offer better pay. Taking on part-time employment or freelance work opportunities could also make a huge difference in helping you get rid of debt sooner.
Debt panellist 3: Keren Bobker, an independent financial adviser with Holborn Assets
The current total of your debts is Dh100,484 with monthly repayments of Dh4,609. With other basic expenses this is not a viable situation and I am not surprised that you are struggling. I would also point out that if you only make the minimum repayment on a credit card the debt will never reduce and with the high rates of interest payable the debt can even continue to increase.
The level of debt in comparison to your income is such that no bank will be able to reschedule your borrowing as it is substantially in excess of the 50 per cent Debt Burden Ration figure set by the UAE Central Bank. This means that no one should borrow money where the repayments exceed 50 per cent of their income.
I am disappointed to read that a bank is harassing you in this way for what are relatively small sums of money. You are behind in your payments so must expect to be contacted but the volume of calls, and the way in which the bank is speaking to you, is unacceptable. The bank, or their agent, is not permitted to discuss your personal situation with any third party and the use of bad language is illegal in the UAE. I would urge you to make a complaint first to the bank itself, which can give instructions to the debt collection agency, and then to the Central Bank.
All banks in the UAE are regulated by the Central Bank and agree to adhere to its guidelines and customer charter. Banks are expected to follow these guidelines, which include treating customers fairly and with courtesy. The volume of calls MD is receiving plus shouting and profanity clearly does not comply.
As the situation stands, you cannot make the current minimum repayments, let alone start reducing the debts so something needs to change as matters can only get worse. I note that in addition to the bank debts you are paying Dh1,000 a month to ‘other people’ so your actual debts must be more than stated. If they are close friends or family, can they wait for the money to be repaid? You are also sending money back to the Philippines each month but can this stop for a while? You have helped out your family but now they need to assist you. Are there any assets that can be sold to reduce the debts in the UAE? Can another family member assist with the repayments to give you a chance to reduce the total outstanding and get repayments back to a manageable level?
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 firstname.lastname@example.org