The Debt Panel: 'I have four cases against me for my Dh235,000 liabilities. What do I do?'

I arrived in Abu Dhabi in 2011 and worked for a hotel for four years. Life was good until I received a lucrative offer to work as a receptionist for Dh9,000.

Despite the huge salary increase, my UAE lifestyle remained the same, however, I totally changed how I rewarded my family. I started taking two holidays a year to the Philippines where I gave my extended family anything they asked for: gadgets, bags, clothes and funds to pay off debt or for education or medical bills. By 2016 I had credit cards and a loan and after two years of generosity I was missing credit card payments. I then approached a private money lender, making the problem even worse.

Things escalated when I rented an apartment at the end of last year and sub let it to friends with the approval of the owner. I also got married and became pregnant that year. In the run up to the birth, I borrowed more money from friends thinking I would get a maternity leave allowance to pay the rent. I had already used my flatmate’s payments to pay for my grandmother’s funeral and family medical bills. I was then told I would only receive the maternity pay after showing my employer the birth certificate.

Meanwhile, my doctor said I must fly to the Philippines before my 32nd week because of pregnancy health complications, otherwise she could not provide a letter for me to fly. To get home, I begged a workmate to book us a ticket. When I left, all the rent, credit card payments and debts to colleagues were still unpaid.

At the end of June, the landlord asked for the latest rent cheque. I sent some money, which I borrowed from an aunt, and my flatmates helped too but it was not enough. I ended up with a case filed against me by the landlord and I paid a Dh3,000 fine. The landlord then kicked everyone out giving them two days’ notice.

I was helpless as it was the final month of pregnancy and I was deeply stressed. Then the bank started calling my mum and my colleagues started asking for their money — it came all at once.

When I returned in September with my husband and baby, I was detained at the airport as the landlord had filed a case over Dh14,000 in unpaid rent. Because I was with my baby, the police released me provided I surrender my passport.

I returned to work on September 15 and was fired the next day because of my debts. Now the landlord says if I pay Dh24,000 for the remaining three months’ rent plus legal fees, he will cancel the case. I begged for a reduction but he may file a civil case.

Two banks also have cases against me and a case has also been raised against me in Abu Dhabi from an individual who lent me money. I have been ordered to pay another Dh3,000 to the individual by the end of the month. My former employer cannot cancel my visa because of the cases. They are also holding my maternity pay and my final salary until all of this is resolved. My debts are:

Credit Card 1: Dh51,000 (case filed by the bank)

Credit Card 2: Dh22,000

Credit Card 3: Dh22,890

Credit Card 4: Dh11,000

Loan: Dh54,280 (case filed by the bank)

Rent case: Dh24,000

Different People: Dh50,000

Total: Dh235,170

My husband and I are still looking for jobs. My family in the Philippines are also in debt as they borrowed to help us. I have been doing a few part-time jobs while I try to secure work, such as casual waitressing and cleaning houses. I am 29 and our expenses are Dh1,500 for rent, Dh500 for groceries and Dh200 for transport. It wasn’t my intention to run away and when I came back to fix everything I lost my job. How do I solve this? CC, Abu Dhabi

Debt panellist 1: Keren Bobker, an independent financial adviser with Holborn Assets

Having this level of debt, legal cases and being in the UAE without an income means there are serious problems.

While I appreciate you wanted to be generous to your family, perhaps even show off your good fortune, it is never wise to run up debt to fund a lifestyle or impress people.

A new federal insolvency law set to come into effect in January is very timely for you.

Keren Bobker, Holborn Assets

As there are cases against you, I doubt you will be able to leave the Emirates now, however, it appears the debts are all in your name and not your husband’s. If he is able to travel, it may be best to have your child looked after by your family so that you and your husband can concentrate on finding employment and earning money to repay your liabilities.

Is your family aware of the debts against you and how they accrued? Can no one step up to keep you out of prison? Jail time is a real possibility when there are cases against a person and they do not make any repayments.

A new federal insolvency law set to come into effect in January is very timely for you. The new ruling is designed to protect people from prosecution and decriminalises debt and will offer a way to work with a court-appointed expert to find a workable solution for debt repayment. You will then have three years to pay off your liabilities.

The new law means there should be no issue in visas being cancelled and so will allow individuals to take on a new role with an income that can be used to service the debt. If you have no job and therefore no income, the other option is be declared insolvent and the court will look to liquidate any assets you have to ensure you repay your creditors.

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

This is a very sticky financial situation. There's unpaid debt, overdue rent, legal claims … and to make things worse, no stable source of income.

You mention your previous employer is holding your maternity pay and end of service benefits, until your visa is cancelled. Can you negotiate with them to release your maternity pay? The extra cash can help partially repay the landlord who's filed legal charges against you and meet the other legal claims. The sooner you clear all the legal charges, the sooner your visa can be cancelled and your final salary and benefits credited to your account.

Once you land a stable job, it would be a good idea to seek a debt consolidation facility. Right now the banks won't agree to consolidating your debts because you don't have a fixed source of income.

Alternatively, consider enlisting external help. One option is to approach debt management agencies in the UAE. You can access their credit counselling services to come up with a plan of action. These agencies may be better positioned to negotiate with your lenders, however, these services come at a fee.

Another option is to get pro-bono legal help. The Philippine Consulate in Dubai and the Philippine Embassy in Abu Dhabi run free legal aid clinics every month, where lawyers offer free counselling for Filipino expats on various legal issues in the UAE, including debt management. Visit them for a consultation armed with all the documents pertaining to your debts and legal charges. With the UAE's new financial insolvency law set to come into effect in January, you can also ask the lawyers how to access this legal route or you can approach the courts yourself to start the process.

You must realise what got you into this financial trouble in the first place: your generosity and willingness to sacrifice your own financial stability to please your extended family. It would be worth having a chat with the people you helped out earlier, to return the favour.

Debt panellist 3: Rasheda Khatun Khan, founder of Design Your Life

It's time to seek legal advice. Many law firms offer pro bono work especially for debt cases. They will be able to liaise with the creditors and help you negotiate a payment plan. At the same time approach the banks and request options and a payment plan. It is better to explain your circumstances than to ignore communication.

You and your husband must focus on finding work. During this process clear your mind of your financial stress by putting it aside; this will help you look and research objectively. List your skills and achievements — this clarity will give you more confidence selling yourself to potential employers.

Finding a job and restructuring your debt into affordable monthly repayments is half the battle. The other half is changing your spending behaviour. Spending money you don't have on yourself or others, even for good causes, will always catch up with you. Planning your finances and budgeting for what you can and want to buy helps you keep track and spend wisely.

A key indicator of spending beyond your affordability is when your credit card balance starts to increase. Credit cards are best used when the full balance can be repaid at the end of every month. The moment you only repay the minimum balance or part of what you owe, interest is charged in the region of 35-40 per cent per annum. This is then added to the outstanding balance and the cycle of debt on your credit card begins. Learning to budget and becoming a conscious spender is a key part of your solution.

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