I owe Dh25,000 on a personal loan and am now stuck in India because of the Covid-19 flight restrictions. I borrowed the money for some business affairs in India and have only paid two of the loan's monthly Dh765 instalments so far.
I went on annual leave to India on March 2 to see my family with the intention of returning to the UAE on March 31. However, the flight restrictions then prevented my return.
At the start of April, my employer stopped paying my salary due to the pandemic and there is no indication as to when my income will return.
Every personal finance customer at my bank received a one-month deferment for April, so I then applied for a further three-month deferment on the loan with a letter from my employer explaining I was on unpaid leave.
I was hoping that would deal with the May, June and July payments, however, I have still not received a reply from the bank. I have followed up by email and phone but no one picks up in the collections department. I even tried contacting them through Twitter.
In the meantime, the bank is sending me messages that say my loan is in arrears, that I must pay the full payment and that my credit rating has been downgraded.
I have applied to return to the UAE but I am still waiting to re-enter and resume my work. I work in Dubai in the money exchange sector and earn Dh4,200 a month. I should be able to return within a month to tie in with my return to work. I live in Sharjah.
I have savings in India and can afford to repay the debt. I could ask a friend to make the repayments for May and June on my behalf but will that solve my problem? I am particularly concerned about my credit score being affected.
I am 36 and support family in India while my monthly expenses in the UAE come to about Dh2,000. I am still waiting to hear from the bank. What steps should I take now? SS, India
Debt panellist 1: R Sivaram, executive vice president, head of retail banking products, Emirates NBD
I recommend you continue trying to reach your bank and seek a telephone appointment with the concerned department. Provide documentary evidence of your current employment status along with proof of your salary reduction. It would be advisable to also demonstrate that you intend to service the remaining instalments of your loan diligently and that you remain fully committed to clearing the outstanding dues.
It would also be best that you seek help to settle the two outstanding loan instalments due and then ask for deferrals of your future loan instalments. Having a job in hand definitely works in your favour and taking this proactive step to settle your dues will further strengthen your deferral request.
Given that you are being forthcoming about managing your financial commitments with no delinquent history, I am sure your bank will view this favourably and find a suitable solution to address your current financial predicament.
Debt panellist 2: Ambareen Musa, founder and chief executive of Souqalmal.com
It seems unfair on the bank's part to not offer you the three-month payment break, even after you submitted an official letter from the employer seeking the deferral. However, there are certain terms and conditions attached to this debt relief measure. For example, the borrower's repayments should be on schedule and not in default for them to qualify for the instalment holiday. Even if that's the cause of the misunderstanding with the bank, it should have clarified the reasons for not processing your loan deferment request.
Since you've already tried to reach the bank through multiple channels, you may have to take a different course. One option is to consider signing over a Power of Attorney to a trusted relative or friend based in the UAE, who is willing to personally follow up with the lender on your behalf. Alternatively, lodge a formal complaint with the Central Bank of the UAE.
Your worries about this situation affecting your credit score are also legitimate. Have you tried to download your credit report and credit score details through the Al Etihad Credit Bureau (AECB) mobile app? Reviewing your credit history will give you an accurate picture of how the bank has treated your loan instalments and whether or not it has levied any non-payment penalties on the unpaid balance. It will also help you figure out exactly how much you owe to the bank and may even give you a basis for taking up your case legally, since the bank has in no way offered you any explanation on the loan deferral rejection.
If following up with the bank does reveal a valid reason for the rejection of your deferment request, then you must be financially prepared to repay your overdue instalments to regularise your loan and avoid a further negative impact on your credit score.
Debt panellist 3: Stuart Ritchie, chartered financial planner at AES International
While you are still out of the UAE, I would suggest keeping note of all the times you have contacted the bank.
Once you return to the UAE and present your evidence to the bank, you can apply to AECB to have any errors on your credit report corrected. As per the AECB’s website: “[For] data correction – to resolve inaccurate information in your credit report – you will need to contact AECB’s contact centre and we can assist you to raise the date correction with the respective information provider."
In the UAE, as a result of the rare Covid-19 pandemic, all loan and credit card customers were permitted to make a request to postpone payments by one to up to six months with interest deferred. What customers actually receive depends on the bank they are with and the type of loan they have. However, many loan customers, who were either placed on unpaid leave by their employers or received a salary cut as a result of the virus, received a payment deferral of up to three months.
Based on these statements, if your bank agrees to the backdated three-month deferment, I would double check that they do not charge additional interest.
On another note, if your current expenses including your loan equate to Dh2,000, I would highly recommend paying more towards your loan (if it is affordable) to reduce the time you spend paying it off and the overall interest.
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 email@example.com