The Debt Panel: 'I was fined Dh10,200 for a bounced cheque. Can my bank cancel the case against me?'

In January 2020, I was let go from my job as an engineer because my company was restructured. I was looking for a new job but without any luck, so went home for a short vacation. However, I ended up getting stuck there for six months because of the Covid-19 travel restrictions.

In 2015, I took out a personal loan with a bank for Dh134,000. The monthly repayments are Dh3,215, which included credit insurance, and I didn’t miss any instalments while I still had my job. However, because I was unable to return to the UAE for six months, I started to miss my repayments.

I informed my bank that I was unable to return to the UAE until the travel restrictions were lifted between the UAE and India, but the collections department ignored my pleas and deposited my security cheque of Dh154,000. Of course, it bounced and this allowed them to make a report to the police.

This is despite paying off more than 80 per cent of the loan over the past six years and the bank also taking my end-of-service gratuity of Dh19,293.14 when I lost my job and put it towards the loan, leaving me with just Dh33,000 left to pay on it. Plus, I also had the insurance coverage.

I have since returned to the UAE and have been offered a job, which I have accepted even though my salary is 50 per cent less than what I was earning previously. However, my new employer is unable to begin my visa process because I have been fined Dh10,200 by the police for the bounced cheque case. I don’t have the money to pay for this and cannot afford legal representation.

My new employer has given me a very short time to sort out the issue, otherwise they will withdraw the offer. My visit visa expires next month. Is there a way for the fine to be waived because of the circumstances of my case? Or can the bank request that the bounced cheque case is cancelled, which will allow my new employer to sponsor me and I can continue paying off my loan? AA, Dubai

Debt panellist 1: Steve Cronin, founder of DeadSimpleSaving.com

You are in an unfortunate situation that shows how vulnerable a personal loan can make you to any sudden change in circumstances. This is the sort of case that falls through the cracks because it is complicated and nobody can be bothered to help you with the complexity of sorting it out. So you will need to fight for it.

You have credit insurance. While anecdotally credit insurance seems almost entirely worthless, in theory it should cover you if you lose your job and cannot afford to pay. Do you have any documentation about it?

If the terms and conditions of the insurance policy allowed for the bank to claim the loan balance due but it pursued legal action instead, this would not be viewed well by the courts

You should try a three-pronged approach as there is not much time. First, you should contact the bank and try to find someone senior who can actually make a decision, such as a branch manager or senior loan officer at headquarters. Push them on the credit insurance – if it is invalid, then why did they sell it to you in the first place? That is mis-selling.

Go to the office of the Central Bank of the UAE's Consumer Protection Department in Dubai and get their view on what can be done. They will at least want to see evidence that you have tried to resolve this with the bank. Emphasise the credit insurance and the fact that the bank bounced the whole cheque when you did not have much debt left. You should also have been offered a payment holiday under the Targeted Economic Support Scheme (Tess).

You should try to get some kind of legal representation. There are lawyers who will at least give initial advice for free. Can someone lend you the money to pay off some of your fine or contribute towards a legal consultation?

Debt panellist 2: R Sivaram, executive vice president and head of retail banking products at Emirates NBD

Your job loss and the subsequent crisis along with the travel restrictions have unfortunately landed you in this predicament. Given that you are very close to securing a new job, I would suggest that the best approach would be to meet your bank and explain the situation.

Since you have been a diligent loan customer, the outstanding balance amount is low and you have no other liabilities, the bank may choose to take a lenient view of the issue and help arrive at a resolution without the need for any legal recourse.

You can provide them with details of your new employment so as to help structure a mutually acceptable settlement plan to repay the outstanding balance. Explain your intention to settle all outstanding dues in full.

As part of the revised payment plan, also request for withdrawal of the bounced cheque case, which will possibly help you avoid having to pay the police fine.

Once the loan has been repaid in full, you should also obtain a clearance letter from the bank to confirm that all your debts have been settled and that you have no other obligations.

You are turning a difficult corner with regard to your finances and will hopefully soon be on the path back to achieving complete stability.

Debt panellist 3: Carol Glynn, founder of Conscious Finance Coaching

Firstly, congratulations on your new employment. It is a great first step in getting your financial situation back on track.

I would suggest visiting your bank immediately and asking to speak to the branch manager. Bring with you all documentation, including your employment contract/offer, details of your loan, payments made to date, communications with the bank alerting them to your situation and flight details showing you were unable to return to the UAE due to restrictions beyond your control.

You can request that they retract the legal case against you and they may be more agreeable if you are willing to commit to having your salary paid into an account with this bank each month,

It is also important to review the terms and conditions of the insurance policy to check if it allowed for a payout of the balance due in your particular circumstances. If this is the case, then speak to the bank about why they did not claim on the policy and find out if it is possible to claim on it now. You can also check with the insurance company if the bank lodged a claim against the policy to close out the balance due.

As you were unable to make payments for some time, the balance due on the loan may have grown substantially due to interest and penalties applied.

Regarding the bounced cheque fine, you need to have all information from the bank before an assessment can be made on whether to challenge it or not. Unfortunately, it seems time is not on your side if you want to keep the current job offer.

It may be challenging to have this waived as once the fine is issued, it is difficult to have the decision reversed. If you can find the funds, it would be beneficial to get legal advice on this type of situation, which could assess if you could challenge the bank’s decision to deposit the cheque as the loan balance was significantly less than the cheque amount.

If the terms and conditions of the insurance policy allowed for the bank to claim the loan balance due but it pursued legal action instead, this would not be viewed well by the courts.

The fastest way to resolve the situation and prevent you from losing the job offer is to find the funds to pay the fine and have the case closed while continuing to communicate with the bank. Is it possible to use any savings you may have or can you sell any assets such as a car?

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 pf@thenational.ae

Dubai Bling season three

Cast: Loujain Adada, Zeina Khoury, Farhana Bodi, Ebraheem Al Samadi, Mona Kattan, and couples Safa & Fahad Siddiqui and DJ Bliss & Danya Mohammed

Rating: 1/5

if you go

The flights

Air Astana flies direct from Dubai to Almaty from Dh2,440 per person return, and to Astana (via Almaty) from Dh2,930 return, both including taxes.

The hotels

Rooms at the Ritz-Carlton Almaty cost from Dh1,944 per night including taxes; and in Astana the new Ritz-Carlton Astana (www.marriott) costs from Dh1,325; alternatively, the new St Regis Astana costs from Dh1,458 per night including taxes.

When to visit

March-May and September-November

Visas

Citizens of many countries, including the UAE do not need a visa to enter Kazakhstan for up to 30 days. Contact the nearest Kazakhstan embassy or consulate.

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”