I signed up for a credit card in May 2017, which I barely used. Then my company closed, so I lost my job as a sales and marketing executive and returned home to India in August that year. During the sales process for the card, the agent told me there were no hidden charges and that the interest is only 3 per cent on outstanding balances.
When I left, I owed about Dh17 to Dh20 on the card for a music purchase and I was pretty relaxed because I thought the interest on that amount would not be much — maybe about Dh1 per month — which I could pay back when I returned to the UAE.
Then Dh100 started getting added as a monthly fine, which I assume is still continuing today. I asked the lender to let me settle the Dh17 amount but that was not an option. So now I’m in trouble and I fear I won’t be able to return to the Emirates to get a job.
I don’t know how much I now owe on the card because I am too scared to find out. I assume it is a big amount, though I cannot check because I forgot my online password and the card no longer works.
I have received multiple emails from the lender saying they might open a criminal case against me. Also, as part of the sign-up procedure, I submitted a blank cheque, which would bounce if the lender used it to clear the balance. I assume this would lead to another police case and more trouble.
I am 29 and have a job in India in the commercial and packing printing industry earning 23,000 rupees, which is about Dh1,178 a month. I don't have any other debts but this one will have multiplied because of the Dh100 monthly charge for not paying the outstanding balance. Will there be criminal cases against me and how do I get out of this trouble? AA, India
Debt panellist 1: R Sivaram, executive vice president, head of retail banking products, Emirates NBD
I am glad that you are taking steps to manage the situation and clear your debt even though you are no longer based in the UAE. As a good practice, one should always settle all bank debts, however small, and close all lines of credit before relocating from the country to avoid any untoward fees and charges that can add up over the years. I advise getting in touch with your bank at the earliest to explain your position and request details of the original principal outstanding and the subsequent interest and fees charged.
Once you have that information, discuss the matter with the bank’s team responsible for your case. Given that the original outstanding amount was low and that you have no other liabilities, the bank may choose to take a lenient view and support you in settling the issue with minimal charges and without the need for any legal recourse. Once the matter has been settled, ask for a clearance letter from the bank to confirm all your debts are settled and that you have no other obligations.
Debt panellist 2: Ambareen Musa, founder and chief executive of Souqalmal.com
You are partially correct in assuming the bank would charge Dh1 in interest every month. But that's only at the beginning of your debt default. This interest would slowly creep up because of the compounding effect of monthly interest charges.
On top of that, you may be charged a penalty interest on the overdue amount, which may be higher than the 3 per cent monthly interest rate you were promised. The bank may only reinstate your original finance charges once the overdue sum is settled.
There's also another charge that not many UAE cardholders are aware of — the bank may levy a "collection fee" to recover the amount it has spent to appoint a debt collection agency to follow up on your payments. Add to that the late payment charges being levied every month, you're looking at overdue debt that's now much higher than your original outstanding balance.
Now that you've unsuccessfully tried to negotiate with the lender yourself, it may be time to get some hands-on external help in the UAE. Appointing a legal representative here may be the logical option. This legal expert can get access to your credit report from the Al Etihad Credit Bureau (AECB) and find out exactly how much you owe on your credit card. Further, they can negotiate with the lender on your behalf and arrive at a settlement with lower penalties for you. They can also check if a police case or travel ban has been filed against you.
However, if you're worried about paying the expensive legal fees, there may be another option too. You could consider signing over a Power of Attorney to a trusted relative or friend who is willing to follow up with the lender and AECB on your behalf. If they're not able to help on their own, they can approach a certified debt counselling agency in the UAE to handle your outstanding debt.
Lastly, it is important to remind you and all our readers in similar situations that debt doesn't simply disappear, no matter how small it is. It can expand at breakneck pace if left unpaid. Missed payments can seriously lower your credit score too, and seriously affect your chances of ever getting a loan or credit card in the UAE in the future.
Debt panellist 3: Rasheda Khatun Khan, founder of Design Your Life
When taking out a credit facility, understanding your debt is crucial no matter how big or small. Be sure to fully understand the charging structure on your signed agreement. You can ask a bank representative to go through it with you. Even though this is best done when signing up for credit, you can still do it now. Understanding how the product works will help you understand your current situation as well as other credit facilities you take on in the future.
The most likely reason your balance is increasing is not only because of interest chargers but because of non-payment. You are required to pay an amount off your outstanding balance on a monthly basis. Failure to do so will incite late payment charges. This is usually around Dh250 per month. Also interest charges (3 per cent in your case) are often represented as a monthly interest charge. The average credit card in the UAE has an annual interest rate of 37 per cent.
It’s time to deal with this and contact your bank directly. Simply talking to them could result in a settlement or repayment plan. You can ask for some of the charges to be reversed, however, this is at the bank's discretion. Continuing to not take responsibility for your debt will only increase the amount you owe and entangle you into legal cases.
Work out a settlement with your bank; they may accept a lower amount if you pay off the balance in full. It is not worth carrying this burden anymore; it only creates stress and anxiety. Ask family and friends to support you if this will resolve the situation more quickly. If you have any savings, use that to clear the balance. The likelihood is that you are paying more in interest and charges on your card than you are earning on any savings account.
There is also a new insolvency law, with effect from January, where you can apply to the courts for a settlement, even if you are overseas. For unpaid debt cases a person will no longer face a prison sentence, with their debt issue resolved through the courts instead. If you are unable to afford the debt, ask a legal representative to explore whether the law can help you reach a settlement when it goes live next month.
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