The Debt Panel: 'How many credit card instalments can I miss before my bank files a police case?'

The Sharjah resident's salary was reduced due to Covid-19 and she is having problems meeting debt repayments

Steven Castelluccia / The National
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I have been living from pay cheque to pay cheque during the pandemic. My company reduced my salary last summer because of Covid-19 and it has yet to be reinstated to the original amount.

I do not have any savings and my family is not here to help me. My current salary barely covers my rent and a few necessities.

I have two credit cards and when my salary was reduced, I would use one credit card to pay the other. I would do this every month to keep the collection agents away, but I also used them for living expenses, such as buying food and paying for my phone and the internet.

However, I have now reached the credit limit on both cards and cannot use them. I will not be able to afford to pay even the minimum amount that is due at the end of the month and I am worried about what will happen if I start to miss payments on the credit cards.

How many repayments can I miss before the bank files a police case against me? Is there still time to apply for a payment holiday under the UAE Central Bank's Targeted Economic Support Scheme or has that ended? JW, Sharjah

Debt panellist 1: Philip King, head of retail banking at Abu Dhabi Islamic Bank

Unfortunately, the Covid-19 pandemic has resulted in many unanticipated salary cuts and job losses, increasing the mental and financial pressure on residents across the UAE. While you are in an understandably stressful position, there are viable solutions that you can explore to get through this challenging period.

While cards are typically beneficial for short-term financing needs or emergencies, they can be detrimental in the long-term. If not managed properly, they present several risks with overspending and unpaid balances having a direct effect on a person's credit score.

Typically, when you miss only one repayment, banks charge a late payment fee. However, after three missed repayments and warnings from your bank, a police case could be filed against you.

Therefore, we highly recommend that you take the initiative to contact your card provider and inform them of your situation after your salary reduction. It is in their interest to resolve your issue promptly and mitigate any risks of default, so they should co-operate with you on a payment deferral or even new repayment terms.

The good news is that you still have an income, although your salary is barely covering your expenses

During these challenging times, banks are being encouraged to be flexible and understanding of their customers’ circumstances.

You can ask your bank if it can offer you a payment holiday under the ongoing Tess programme, under which customers who provide evidence of being affected by Covid-19 can be offered some financial relief.

The programme has been extended to the end of 2021 to ensure that people and businesses are financially supported as they recover from the economic impact of Covid-19.

During this challenging time, we highly recommend that you decrease your spending as much as possible through tight budgeting or even contacting family for financial assistance.

It might also be helpful to find other job opportunities that will give you a higher salary, allowing you to be in a better financial position.

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

Asking for help is always the best first step to move forward. It is important to know that you are not alone. There are many people in similar circumstances who have lost their jobs or had their salaries cut.

The good news is that you still have an income, although your salary is barely covering your expenses. It is important to take a step back and look at your situation. There are two levers to play here: one is your cost of living and two is your income. By working on both of these areas, you can potentially bring yourself out of financial trouble and start paying off your debts.

I recommend writing down all your monthly expenses, including your rent, if paid monthly. Go through all your outgoings and look at what you can cut that is not a complete necessity.

Can you move to a cheaper place or move in with a friend at a much lower rate for a few months until you are back on track? Any other expenses that are not absolutely necessary, cut them.

Go to the bare minimum for now and remember – this is temporary so that you can get back on your feet.

Now, let us look at your income. Have you started looking for a new job that pays you what you were earning before? If you cannot find one, working a second job in your free time will increase your income level and help to pay off your debts.

If you tighten your belt and try to increase your income for a while and all the extra goes into repaying your debt, you will surely find a way out.

At the same time, carefully read the terms and conditions of your agreement with the bank. Typically, when you miss one loan repayment, banks would charge you a late payment fee, which adds to your balance. After three missed repayments and warnings from your bank, they could file a police case against you.

However, I have seen cases in which banks have filed police cases after only one missed payment to make sure customers do not leave the country. It is important to contact your bank and request help to restructure your repayment and ask if it is possible to consolidate the two cards into one personal loan with lower monthly repayments.

Another option is to receive help from friends and family who can help pay off the debts now after you agree to a monthly repayment plan with them.

Debt panellist 3: Stuart Ritchie, director of wealth advice at AES

I would advise that you contact your bank, either by telephone or in-person at your branch, to find out what debt relief options are available.

The bank may be able to restructure your credit card debts to make your repayments more manageable for you at this current time, such as reaching an agreement that puts your monthly instalments in line with what you can realistically afford.

They may also allow you to make interest-only payments until your full salary is reinstated.

Most banks in the UAE have been offering relief for those affected by the pandemic as part of the Tess initiative, providing they have made previous repayments and their account is in good standing.

Do keep in mind that interest will continue to accrue even when repayments are paused or reduced, so the total amount you repay will be more than it would have been originally.

In the meantime, avoid taking on more debt where possible as this will become unmanageable and paying debt with further debt is unsustainable in the long run.

Speak to your employer about what the options are to return your salary to the amount you earned before Covid-19.

You could also discuss with them about taking on additional responsibilities or options to work overtime, at least temporarily, to boost your earnings. This will give you more room in your budget to cover the daily necessities.

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