I took out a personal loan of Dh270,000 two years ago and had paid off about Dh90,000 by April this year. That month, however, I was made redundant from my quantify surveyor role in Dubai because the company was downsizing. My final settlement was Dh31,000, which was used to pay the monthly instalments on the loan. This means I now owe about Dh150,000. When I lost my job I was earning Dh14,630.
I made all the payments on time until last month and I am yet to secure another job. I borrowed the money to help me pay for my master’s and to clear four credit cards I had debts on. I also used the cash to do some renovation work on my home in India.
I asked the bank to give me a copy of the personal loan insurance contract, a copy of the loan contract and the signed cheque but they refused to give me those copies. The bank has also blocked my online access, so now I cannot see how much money is being taken monthly. I feel I am entitled to see a copy of the insurance document for the loan. What options do I have to get a copy of those documents? Should I involve a law firm and take the matter to court?
I am now close to securing a new job in another Gulf country, which could see my earnings rise to about Dh30,000. If I receive this offer, I will close the loan within eight months. I am 32 and have lived in the UAE for over seven years. I have no dependents so I want to pay off the loan as soon as possible. However, I do feel I am entitled to use my personal loan insurance and also entitled to see those documents. What should I do? KT, Dubai
Debt panellist 1: Ambareen Musa, founder and chief executive of Souqalmal.com
You are well within your rights as a customer to ask the bank for details related to your loan contract. You've mentioned that your loan repayments were made as per schedule until last month, and you have been in constant touch with the bank thereafter. Have you checked with the bank if there is a legitimate reason why they have blocked your online access to track the loan payments? If the lender is your primary bank, they may have blocked the current account after your end-of-service benefits were credited into it. With this, the bank would have frozen your funds to ensure the recovery of the outstanding debt.
Regarding the personal loan insurance, are you aware if the monthly premium you were paying for the policy was to cover repayments against involuntary job loss, or if it offered more comprehensive risk coverage in case of death or disability? These details would be mentioned in your original loan contract, which is why you should have kept a copy at the time of signing up for the loan.
If personally insisting on receiving a copy of the loan contract and insurance coverage doesn't work, you can first lodge a formal complaint with the bank. If no resolution comes from this, your next step should be to take your grievance to the Central Bank of the UAE. Alternatively, enlisting the services of a legal representative may make sense if you're unable to get the aforementioned details from the bank and are certain you are being treated unfairly.
Meanwhile, you should also apply for a copy of your credit report from the Al Etihad Credit Bureau to check your loan repayment record as well as the exact outstanding amount on your loan. This would help substantiate your complaint to the central bank, as well as your case if you choose to take the legal route.
You also mention you may be able to secure a better-paying job in another country. Once you have a confirmed job offer in hand, approach the bank, provide them with proof of the new employment and negotiate a repayment plan to suit your new financial circumstances.
Debt panellist 2: R Sivaram, executive vice president, head of retail banking products, Emirates NBD
I am glad you are being conscientious and financially responsible towards meeting your obligations. Regarding the loan insurance cover, you need to ask your bank if the insurance policy also covers Involuntary Loss of Employment (ILOE). Typically, ILOE insurance would support loan instalment payments for a specific period. If this cover is available, your bank will request you to furnish the required documents to process the claim.
The best approach would be to meet your bank to inquire about the insurance policy as well as provide them with the details of your new employment. Given that you haven't defaulted on any of your instalments and are close to securing a new job, the bank will most likely agree on a settlement plan to help you repay the outstanding amount.
Debt panellist 3: Steve Cronin, founder of DeadSimpleSaving.com
Your situation makes me wonder what the point of payment protection insurance actually is, especially if your bank won’t let you use it. Such protection has been the subject of huge mis-selling scandals in the UK and other countries, when people realise they don’t have the protection they thought they had.
Unfortunately, you had amassed debt of nearly 20 times your monthly salary. Having a cash buffer of three-to-six months’ total expenses can help you get through a period of unemployment, but not cover the amount of debt you have exposed yourself to.
You are certainly entitled to be shown what your outstanding loan balance is and how it is changing. You are also entitled to see the details of the payment protection insurance you purchased. I suggest you go to a branch and ask to see the branch manager.
Make it clear to them that you are close to securing a much better paid job and so will be able to pay off the debt. If the manager is not helpful then make it very clear that your next step is to go to a lawyer. You can also try talking to someone else on the phone; you may get a different answer depending on who you talk to, especially if you ask to speak to their manager.
The insurance contract is ultimately with an insurer rather than with the bank, so talking to the insurance company is a priority. If you go back through your records, do you have any indication which insurer provided the contract? Alternatively, you can ask the bank which insurer typically provides the protection insurance.
Most policies require you to claim within 60-90 days of becoming unemployed, so you may have missed your window to claim. You should still try though, as it is only recently that you have been unable to make payments. You could also inform the insurance company that you were unable to claim during this window because the bank refused to make the necessary documents available.
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