The Debt Panel: 'I haven't been paid since January. How can I apply for personal insolvency?'

With debts totalling nearly Dh300,000, the Abu Dhabi resident has exhausted his savings and can no longer afford to meet multiple credit card and loan repayments

Mathew Kurian / The National
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I need some advice about my personal finance situation. I work for a company in Dubai, which has not paid my monthly salary of Dh14,000 since January. They put me on unpaid leave from April 2020 and there is no sign of going back to work in the near future.

I have six credit cards and a personal loan with different banks, which I managed to keep paying with my savings and help from family until April. I am on payment plans for some of them, and have also been given between one and three-month deferments from April because of Covid-19.

My debts are:

  • Loan: Dh88,456 (Dh3,400 monthly instalment)
  • Credit card 1: Dh18,418 (Dh1,800 monthly instalment)
  • Credit Card 2: Dh35,074 (Dh3,000 monthly instalment)
  • Credit Card 3: Dh52,841 (Dh2,650 monthly instalment)
  • Credit Card 4: Dh24,260  (Dh1,490 monthly instalment)
  • Credit card 5: Dh22,361 (Dh578 monthly instalment)
  • Credit card 6: Dh54,200  (Dh2,318 monthly instalment)

Total: Dh295,610

I am not in a position to resume the payments now that the three-month deferments have come to an end and I am being hounded by collection agents.

I recently read an article in The National about an option to file for personal insolvency in Abu Dhabi. As an Abu Dhabi resident, can I avail of this facility and get some sort of standstill agreement with the banks so I can start paying back as soon as my company settles my dues and starts operating again, or I get another job?

How can I take this matter to the courts to apply for personal insolvency and are there any pro bono legal services that can help me? All the lawyers I have spoken to regarding this have huge fees that I can't afford to pay. I am not a habitual defaulter or plan to run away from my debts – I just need more time to get out of this Covid-19 impact on my life.  WA, Abu Dhabi

Debt panellist 1: Taronish Mistry, Associate, BSA Ahmad Bin Hezeem & Associates

The situation you are in is unfortunate given the pandemic and the impact it is having. However, we note that your company has not paid your salary since January, which was before the pandemic and the pandemic-related restrictions came into place. You should file a complaint with the Ministry of Human Resources and Emiratisation for the late/unpaid salary that your employer owes you, especially for the period before you were placed on unpaid leave due to the pandemic.

Bear in mind that in the end, it is in the banks’ best interest that you do not default on your loans. It is uncertain whether you have communicated your more recent situation to the banks. If you do have any combination of the loan and credit cards from a single bank, some offer the option to restructure and consolidate loans to give you some relief in the short term. This is by no means easy, and you will likely end up paying off the debt for a longer period of time and with higher overall interest.

In terms of strategy, it is generally the case that you may still pursue the UAE Insolvency route after speaking to debt management companies

Whether or not the banks will cooperate is uncertain, so it is usually worth engaging a debt management company, which can negotiate with the banks on your behalf. There have been success stories starting from more dire situations, so do keep hope but do not expect miracles. Admittedly, having a job is key, so do your very best in that area. Nevertheless, debt management companies and other such pro bono services specialise in managing these types of situations with your best interests in mind, as opposed to a court-appointed mediator/expert in the insolvency process, who has to manage both sides of the debt.

If all else fails, there is the insolvency route. The fairly new Federal Decree-Law No. 19/2019 on Insolvency (the “UAE Insolvency Law”) may allow you to negotiate a settlement plan, which is usually three years in duration, with the banks under the supervision of a court-appointed mediator/expert.

If you (as the debtor) approach the courts to file for this process (known as “Settlement of Financial Obligations” in the UAE Insolvency Law, covered under Articles 3-27), you will need to present statements showing your financial status, sources of income, state your profession, assets (movable and real estate), names and addresses of all creditors/lenders, and details of the loans (approximate value of each, whether you estimate you will be able to pay them now or in the future), bank transfers made up to one year before the date of application, among other information. It is important to note that you will also have to present a proposal/plan as to how you intend to pay the debts. The court will then consider the funds necessary to support yourself and your family/dependents.

If the court accepts your application for Settlement of Financial Obligations, Article 7(3) of the UAE Insolvency Law states: "[It] shall result in the suspension of the creditor's right to request execution against the Debtor's Funds or the opening of his Insolvency and liquidation proceedings. Such suspension shall continue during the period of the Debtor's proceedings of the settlement of financial obligations."

In the insolvency process, a court-appointed expert does have the ability to sell your property to pay off debts. This procedure is generally going to be more extreme than settling the matter through negotiation with the banks. It is recommended that you speak with a qualified professional to give you more detailed advice, specific to your situation and your debts.

Even under the UAE Insolvency Law route, you will still have to pay court fees and expert fees. Given that your debt stands at above Dh200,000, the relevant banks to whom at least Dh200,000 is owed individually or collectively, can file for Debtor’s Insolvency and Liquidation of Funds (under Article 29 of the UAE Insolvency Law) if they have served you with a notice to pay the due debt and you have not done so for 50 consecutive working days from the date of said notice.

In terms of strategy, it is generally the case that you may still pursue the UAE Insolvency route after speaking to debt management companies, or that if the banks do not hear back from you in time, they may opt to approach the courts. If you equip yourself with the backing of a debt management company and approach the banks, they may see value in your willingness to pay off your loans, even if over a longer term, rather than take drastic measures that may give them lower returns.

You mention that you are not a habitual defaulter or plan to run away from your debts and need more time to "get out of this Covid-19 impact on my life”. That is respectable, inspiring and will serve you well as you work your way out of this situation. We wish you every success during this troubling time.

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

When it comes to financial relief measures launched by banks for borrowers impacted by the Covid-19 pandemic, we have noticed that in many instances banks are willing to offer a restructured repayment plan to borrowers who are continuing to financially struggle past the three-month payment holiday. So, it may be worth reaching out to your primary bank, explaining your financial circumstances to them, and requesting relaxed repayment terms.

However, since you have multiple credit card debts with different banks, this negotiation will have to be handled separately with all the individual banks. You could consider working with a licensed debt management agency to help with the negotiations.

While you continue to keep an eye out for new job opportunities, also stay on the lookout for part-time or freelance work opportunities to help you unlock an income stream and manage your financial commitments better.

As for the decision to file for insolvency as a way to tackle your considerable debt commitments, you may want to seek the opinion of a legal expert first. In case you'd like to get pro-bono legal advice first, you can approach the Abu Dhabi Judicial Department or your home country's embassy or consulate for a free legal consultation.

An alternative to this is to consolidate your existing savings and liquidating some assets back home to gather the funds to pay off the banks yourself. Banks may be willing to lower the outstanding loan amount and waive some fees in favour of a lump-sum payment too.

Coming to the matter of delayed salaries, have you considered taking this issue up with the appropriate government authorities? Based on whether your company is registered in mainland Abu Dhabi or within a free zone, you can submit a complaint with the Ministry of Human Resources and Emiratisation (MoHRE), or directly with the free zone authority.

If other colleagues have been affected in a similar way, raising a dispute collectively can help you put some pressure on the employer to release your salaries. And if the dispute cannot be resolved, you will be redirected to take the case up in the Labour Court. Since your employer hasn't clarified if and when they will release your overdue salary, taking this step may help you negotiate with the employer better.

While you continue to keep an eye out for new job opportunities, also stay on the lookout for part-time or freelance work opportunities to help you unlock an income stream and manage your financial commitments better.

Debt panellist 3: R Sivaram, executive vice president, head of retail banking products, Emirates NBD

This is a very challenging time and the additional burden of delayed salary payments and indefinite unpaid leave is indeed stressful.

My advice would be to discuss and explain your situation to your employer and request them to clear your unpaid salary dues so that you can address your upcoming instalments. In your current situation, this is very important and would give you time until you are able to find suitable employment.

It would also be best that you communicate your situation with the banks proactively. You could inform them that you are committed to clearing your dues and request for an additional moratorium period on your loan as well on your monthly card payments to allow yourself time to become more financially stable.

With respect to your question around filing for personal insolvency, it would be best to contact a lawyer familiar with the matter and seek guidance. I wish you the best of luck.