We are a well-established Pakistani family who have spent 40 years in the UAE. We have been struggling financially since I lost my administration job shortly after giving birth to our third child in 2015. I did not find a new role until 2018, which pays Dh6,000 a month.
My husband works as an electrical engineer but his salary payments are irregular, sometimes coming after 40 or 60 days. He took out a Dh400,000 loan in 2015 to cover his father’s medical bills back home, with the monthly instalment of Dh10,800 taking up more than half of his Dh22,500 monthly salary. It will be completed in March 2020. This leaves us with a very small amount to pay for general expenses such as groceries and bills. As well as the loan we have other debts too. They are:
Personal loan: outstanding balance of Dh129,600
Outstanding school fees: Dh40,000
Outstanding rent for this year: Dh17,500
Outstanding rent on old home for last year: Dh95,000
Car registration and fines for unregistered vehicle: Dh40,000
We have reduced our expenses by moving to a cheaper apartment (going from Dh95,000 to Dh35,000) last year. However, this backfired and we ended up being charged rent for two houses last year as the old owner did not allow us to leave. We are now in arrears on last year’s rent and have so far paid half of this year’s rent.
We tried to move the children to lower-fee schools but we have ended up with the kids, ages 10, 7 and 4 sitting at home for the last year because the old school refused to provide a leaving certificate unless we cleared our debt with them.
We have contacted the Red Crescent for help but our case has been under discussion for two years and has not been finalised. We have also tried doing part-time work to supplement our income but it always seems to go wrong like everything in our life. Our other monthly expenses come to Dh15,300 and include Dh5,800 monthly rent (includes water and electricity and half of this year is paid); Dh3,500 for phone, food and petrol; Dh2,000 for remittances and Dh4,000 for the three kids school fees (though they are not in school at the moment).
We also cannot register our cars due to lack of funds and the fines are increasing as the vehicles are unregistered. We need Dh20,000 to regulate the status of the cars. We are drowning in debt and need help to find my husband a higher paid job, as well as somewhere to go for financial assistance. Ideally we need a little help until we finish paying off our main liability. Are there any sources that can help us waive off the school fee arrears or financial aid recommendations for car fine discounts? KF, Abu Dhabi
Debt panellist 1: Shaker Zainal, head of retail banking at CBI
There are a few actions to consider pursuing to help with your financial distress. Firstly, explore whether there are any Pakistani schools in Abu Dhabi. Discuss your financial situation with them and check whether you might be entitled to get a scholarship or fee waiver for your kids, at least for a year. Alternatively, contact the Department of Education and Knowledge, explain your situation and request help on your children’s education and dealing with the schools.
Secondly, check your rental contract for your old house and clarify if there is any clause allowing you to terminate your contract early. Typically, some tenancy contracts allow tenants to terminate their contracts before the expiry date by notifying their landlords a couple of months in advance. However, there might be other terms and conditions attached to the early termination option and you need to check these. Consult a lawyer on this, who can offer proper advice on your options. Also contact the Abu Dhabi Rental Dispute Settlement Committee, which can help you clarify your rights.
Thirdly, approach the Roads and Transport Authority and explain your financial situation. Find out whether they can provide you with any fee waivers, reductions or deferrals. Also consider selling one of your cars and use the cash proceeds to pay for some of your most urgent financing needs. You then need to manage your family’s commuting needs with a single car, until you have some financial relief following the expiry of the loan. Cutting other expenses as much as possible is also advisable including stopping the Dh2,000 monthly remittance.
Finally, approach the bank and discuss restructuring your existing loan, with a longer tenor. Be aware the bank will consider your financial situation, debt-burden ratio and income levels in its assessment of your restructuring application.
Debt panellist 2: Ambareen Musa, founder and chief executive of Souqalmal.com
You owe money to the bank and four other parties too. This topsy-turvy financial situation coupled with the costs of raising three kids in the UAE is bound to be a huge challenge.
It's shocking to hear you owe rent for an apartment you were not even living in. Did you not give your previous landlord a written notice two months prior to vacating? The Abu Dhabi Rental Dispute Settlement Committee handles rental disputes between tenants and landlords. However, it may be futile to pursue this if you did not fulfil the notice period requirement or did not have your previous tenancy contract registered with the municipality.
The unpaid school fees is also a major issue that requires immediate attention. Have you not considered moving the kids back to your home country? If none of the debts are directly in your name, you could think about relocating to Pakistan, even if it is for a few years. Given the significantly lower cost of living, education and childcare in Pakistan, you would be able to provide for the kids far more comfortably. At the same time, your husband would be able to direct all his energy and resources towards settling the outstanding payments here.
Based on the details shared by you, you don't appear to have any savings or investments to fall back on. That leaves credit and financial aid as the only go-to solutions. Since you've managed to pay off a major portion of your personal loan, and are now primarily struggling with multiple arrears, approach your lender for a loan top-up. It's understandable that the last thing you want is more debt after struggling with the original loan for years, but a loan top-up amount that's just enough to cover your major arrears like outstanding school fees and car registration-related fines will give you breathing space. If the interest rate being offered on the top-up is too high, scout the banking market for lower rates and better deals on new loans.
The idea is to carefully choose a low-cost loan, while making sure you have the resources to keep up with the repayments over the entire loan tenure. A loan default will only make matters worse. The additional loan amount will not only help settle your outstanding financial obligations, but also put a stop on the fines and penalties you are accumulating.
Debt panellist 3: Keren Bobker, an independent financial adviser with Holborn Assets
If your regular household income is Dh28,500 and your debts total Dh322,000, it is understandable you are in a difficult situation. You say your husband is paid late on a regular basis but this is not acceptable and your employer is breaking the law. Your husband can raise a complaint with the relevant free zone or the Ministry of Human Resources and Emiratisation as appropriate, but if a company makes a habit of this they may not change, so it would be wise for him to look for a new position on a proactive basis.
If your total income, even if received late, is over Dh25,000 and your expenses are Dh11,300 without the school fees there should be leeway to manage money in a better way to meet your liabilities.
You mention cars, plural. Do you require two vehicles? Can one be sold to improve your cash flow? Are any family members able to assist in the short term? Your issues appear to be more about money management, so you must take firm control and look for employment with a steady income.
There are a number of organisations in the UAE that can assist in hardship situations, such as Beit Al Khair but as you are both earning an income, I don’t think you will qualify. Other charities will only assist women who have been widowed and are in hardship or focus on situations with medical issues.
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