I am a single parent from India living in Abu Dhabi and I’m having problems repaying a loan my husband took out in my name. He left me and my daughter without notifying us in February 2015. Before he left, my husband asked me to take out a Dh160,000 loan for him, which I am still paying off. I don’t know what he did with the money. The outstanding balance is now Dh102,000. I also have a kuri (an advance payment paid-off monthly) of Dh20,000 from my friend’s mother, which I used for my daughter’s school fees and to clear debts. Plus I have a credit card debt and I owe money to friends for my sister’s wedding, which I need to start repaying next month. My debts are:
Loan: Dh102,000 (monthly instalment of Dh4,132)
Kuri: Dh20,000 (Dh2,000)
Credit card: Dh9,300 (Dh2,000)
Friends: Dh30,000 (no payments yet)
Total: Dh161,300 (Dh8,132 in monthly payments)
I work for an oil and gas company, earning Dh9,500 but it is not enough. My husband promised he would pay the instalments but never did. He now lives in another Gulf country. It is becoming more difficult to keep up with the loan instalments due to all the costs for my daughter. Her monthly expenses come to Dh4,643 and include school fees of Dh1,443 (which includes books), bus fees of Dh500, babysitting fees of Dh900, Dh500 for school activities, Dh500 for her food and Dh800 for her outings and activities. My expenses come to Dh12,082 and include the debt payments as well as Dh2,850 for our rent, Dh600 for petrol and Dh500 for groceries.
On top of this, I pay for my daughter's visa, her medical insurance and the phone bill. I am really fed up with everything and need help as I am going into a depression. I really want to take care of my daughter properly but I am stuck here. What do you suggest? FL, Abu Dhabi
Debt panellist 1: Shaker Zainal, head of retail banking at CBI
If we leave aside your monthly debt repayments for a moment, your primary monthly budget balance (your income minus your living expenses for a month) is actually delivering a surplus of around Dh1,000. This shows that the pressure on your finances is caused by the debts you have accumulated in the past and therefore your priority should be to reduce your indebtedness.
Additional bank financing is unfortunately not an option in your case, because your debt-burden-ratio, as measured by your total monthly bank financing repayments divided by your monthly income, is well above the maximum 50 per cent level permitted by the Central Bank of the UAE.
Given your situation and your husband’s role in how you ended up with these challenges, first and foremost, it makes sense to ask your husband to contribute to your loan repayments and your child’s expenses. Can you seek some family members’ help on this, including from members of your husband’s wider family? Are there any legal actions you can consider back home in India to enforce your rights?
Other options include selling any assets in India or the UAE to help with your immediate financing problems.
Also, discuss your situation with your employer, and seek some support, such as an advance salary payment, as well as request temporary financial assistance from your family members or friends.
As credit cards tend to have relatively higher interest rates, compared to personal loans, prioritise your payments to your credit card, to avoid incurring high interest and late payment charges. Also consider temporarily pausing repayments to your friends, to allow you to finish off your credit card debt first.
Once you have brought your DBR below 50 per cent levels, you can approach your bank and ask for a restructuring loan, to extend the maturity of your current loan and bring down your monthly repayments. This will give you a relief and enable you to resume all of your payments, including those owed to friends.
Debt panellist 2: Ambareen Musa, founder and chief executive of Souqalmal.com
Your husband's actions are morally questionable on so many levels: taking debt in your name that he had no intention to help pay off, leaving you and your daughter alone without even an explanation, and shrugging off his responsibility as a parent.
Now that you're stuck in this situation, it's important to figure out where you stand. Are you looking to get legally separated from him? He may not be legally responsible for paying the debt in your name, but he is definitely legally responsible to share childcare costs with you. It would be a good idea to speak to a lawyer and get some advice on the matter.
As for dealing with the multiple debts you've taken on, either find a way to cut back on expenses to redirect the funds towards debt repayments or supplement your income to pay off the debts faster.
You also must consciously focus on trimming your expenses and working with a strict budget, if you want to get closer to repaying your debts. While you can make a bunch of cuts and sacrifices here and there, focus on changes that will make a huge difference. Make a list of all your expenses — house rent, your daughter's school fees, household expenses, babysitting services etc. Then analyse where you can cut back and eliminate all unnecessary spending.
Look for practical solutions: could you move to cheaper accommodation? Could you enrol your daughter in a school that charges lower fees, or maybe have her temporarily move to India to complete a school year, if living with her grandparents is an option? This might be painful to consider but you have to face the harsh reality of your current situation; you can't provide the life you want for your daughter while struggling with mounting debt. Considering the significantly lower school fees and living expenses back home, you can save a huge chunk of money and put it towards repaying your debts.
To boost your income, consider freelance or part-time work. You could also ask your employer for a raise, request them to grant you a few months salary in advance or offer you an interest free short-term loan. Make sure you use the extra cash to settle the credit card and loan first, since you're paying a significant amount of interest on these debts.
Also work out a repayment arrangement with your friends, and be upfront with them about your financial circumstances. If you have an honest intention to pay off the debt, your close friends could be willing to cut you some slack and allow you more time to repay.
Debt panellist 3: Rasheda Khatun Khan, founder of Design Your Life
It's so upsetting to hear of marital break-ups that result in challenging financial circumstances. Not only do you have to deal with the emotional fallout but the financial process too. There are a few avenues to explore:
1. Request a committed monthly amount of money from your husband. Seek legal advice on this and explain what happened. Perhaps a court order is now necessary. Seek law firms that offer pro-bono legal advice to ensure their fees don't become another burden.
2. Ask your friends and your friend's mother if you can delay their repayments. Let them know you need their support. If they agree, take what you would have paid them monthly and put all towards paying off your credit card. Make this your priority.
3. Request a deferment to your monthly loan repayment with the bank, which means you can apply to miss a month. Use that month's repayment to pay off your credit card.
4. Find friends that can support you. Financial stress is one of the greatest causes of illness; you need emotional support to help you get through this. Remember money does not define who you are, this is just your current circumstance. Having the right mental attitude will help you get out of your debt cycle.
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 firstname.lastname@example.org