The Debt Panel: 'I owe Dh170,000 on nine liabilities. How do I get out of this mess?'

The Abu Dhabi secretary's monthly payments are higher than her salary

Illustration by Mathew Kurian 
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I have nine different debts and am struggling to manage the payments. When I first moved to the UAE in 2007, I was doing OK with a salary of Dh4,500 and managed to save as well. The problems started when I lent money to friends in my home country without charging them interest. I wanted to help them as I had extra money I was going to use for a holiday. Unfortunately they never paid me back and I ended up using a credit card I'd signed up for in 2013 during the trip. With no money left and rent to pay, I took another credit card and then another card. When I started missing the payments I started borrowing from loan sharks.

Today my debts are: outstanding balance (monthly minimum payment)

Personal loan: Dh31,000 (Dh2,680)

Credit card 1: Dh6,000 (paying the minimum)

Credit card 2: Dh25,000 (have not paid for more than two years)

Credit card 3: Dh5,000 (have not paid for more than two years)

Credit card 4: Dh40,000 (have not paid for more than two years)

Loan from my employer: Dh13,000 (Dh2,000 deducted from my salary every month)

Loan from a bank in the Philippines: Dh10,250 (Dh1,200)
Loan from private lender: Dh6,400 (Dh600)
Loan from loan sharks: Dh35,000 (Dh3,500 in monthly interest)

Dh171,650 (Dh9,980)

I earn Dh7,000 as a secretary in Abu Dhabi and my expenses come to Dh1,000 for remittances of Dh500 plus food and rent. I have tried applying for a job with a better salary but have not had any success. How can I restructure my personal loan? By doing that I will have extra money to pay my other liabilities. At the moment I borrow from loan sharks every month to cover my payments.

I signed up for the loan to cover my maxed credit cards so that the banks would stop harassing me. But the loan was not enough to pay off all my liabilities and I used a portion of the loan to start a small business that later failed. Unfortunately, after paying off two of the credit cards, they were blocked for future use. I asked for the cards to be unblocked but to no avail.  I also used some of the loan to pay off the loan sharks and some for a holiday back home as it was my parents golden wedding anniversary. I paid for my ticket and some of the wedding expenses. Unfortunately, after a month my father passed away so I needed to fly home again.

I have tried solving my problems by taking a loan from my home country, not taking a holiday for four years and using my leave money to pay off the loan sharks and seeking help from my family. At first I did not want to tell them but then they started receiving calls from collecting agents and my sister took a loan from a bank to help. I also have a small reselling business to help me.

I am single and don't have any children. My entire salary goes towards debt payments. How can I get out of this mess? ME, Abu Dhabi

Debt panellist 1: Ambareen Musa, founder and chief executive of

It is never a good idea to mix friendship and money - you've now realised this the hard way. On top of that, spending beyond your means and ignoring the obvious signs of a debt problem - taking on too many credit cards, and then resorting to borrowing from private moneylenders - has all culminated into you amassing a heap of debt that's nearly 25 times your monthly salary.

For the loans you've taken from illegal moneylenders and loan sharks, remember, they are called loan 'sharks' for a reason.

Your monthly debt repayments have now surpassed your income, you will have to address the problem and speak with your lenders. This is the only way you can avoid the banks taking legal action against you. You can explain your financial circumstances and request them to restructure your payments in a way that you're still able to keep paying them off.

Getting the individual credit card providers (especially the ones you haven't repaid in over two years) to restructure your credit card debt into a fixed-interest loan may be the way to go. But it isn't going to be easy. If approaching them on your own doesn't help, you could enlist the services of a professional debt counsellor or debt management company to negotiate on your behalf.

For the loans you've taken from illegal moneylenders and loan sharks, remember, they are called loan 'sharks' for a reason. There have been countless reports of exploitation and harassment of UAE-based borrowers at the hands of these moneylenders. Besides charging exorbitant interest rates and enforcing unfair loan terms, loan sharks can stoop to intimidation and scare tactics when the borrower is unable to repay them.

It makes sense to keep the hunt for a new better-paying job going, but you could also increase your earnings through an additional part-time job or freelance work. On the personal front, you must start prioritising your debt repayments. Restrict your monthly expenses to a bare minimum and focus on paying off and closing your most expensive debts first. Use any extra cash you can unlock to repay the loan sharks and get rid of them once and for all.

Debt panellist 2: Rasheda Khatun Khan, founder of Design Your Life

There are many nasty effects of a situation like yours, not only in terms of high interest rates and fees but also your physical and mental health.

There is a point when borrowing more money only becomes detrimental to your finances and you end up in a vicious cycle of unmanageable debt. Not being able to pay your loans and credit cards for more than three consecutive months is your first serious alarm bell.

To start your journey along the road to recovery, assess your expenses and make adjustments. Continuing the same cycle will only escalate the problem.

First, list your credit cards and loans by balance - from the smallest amount to the highest. Then apply the snowball effect; this means you only repay the credit card with the least amount owing first, which in your case is credit card 3 with a balance of Dh5,000. So, in one month instead of paying towards the other debts, put all your money on the one card. This will clear this card completely. Next target credit card 1 with a balance of Dh6,000, then the private loan for Dh6,500. Within 3 months you could have cleared three loans. Continue down this route, ticking your debts off as you go. It’s psychologically more satisfying when you can completely clear and get rid of a credit card or loan than trying to simultaneously pay them all off at once.

It’s never too late to get yourself back on track; the key is to stay focused and say no to what’s not affordable, even if it's family.

Debt panellist 3: Philip King, head of retail banking at Abu Dhabi Islamic Bank

Turning to informal lenders (loan sharks, as you call them) is understandable for someone in your circumstances, but they really should be avoided at all costs. This type of informal loan usually involves exploitative terms, and sometimes unsavoury methods.

You have done well to increase your salary significantly since you arrived in the UAE, and to pay off some of your cards – which is the right approach, as the charges can start to mount if you have excessive liabilities.

Now, you should concentrate on paying off the liabilities that are the greatest burden – your cards and the loan sharks – while trying to reschedule your personal and employer loan to make monthly payments more manageable.

The ideal approach is to request your bank to consolidate your debts into a single loan with lower rates and a stretched-out tenure. They may also be able to provide facilities such as instalment deferrals to allow you to take a short-term break from repayments.

To establish a sound financial footing, find other ways to improve your income and liquidity to supplement your debt management plan. This may mean finding a job with a better salary or selling your assets to support your current cash flow. I know that you tried to set up  your own business, and this failed, so avoid taking any risky investments.

The most important thing is to keep talking to people about your situation. Talk to your bank, and keep trying to work out a solution – ultimately this is win-win for you and your  bank. Also keep talking to your friends and family – but without making any demands – as moral support from them is important while you work through a stressful situation.

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