The Debt Panel: Sharjah customer service executive left with Dh150,000 in debt because of divorce

The mother-of-two in Sharjah earns Dh5,000 a month and is struggling to afford her monthly repayments.

Clockwise from top left: Ambareen Musa, founder and chief executive of Souqalmal.com, The National columnist Keren Bobker, Rasheda Khatun from Financial Life Planner, and Jamel Alvi, chief credit offiShow more

I am having terrible difficulties with the Dh150,000 in debt I have accumulated. I have loans from two banks and two credit cards from another two banks. I work as a customer service executive in Dubai and my monthly salary is only Dh5,000. Previously I could manage to make my monthly payments, but because of an unexpected situation – I am divorcing my husband – I no longer can. I have started missing payments and I still need to send money for my family back home. I borrowed the money, as during my marriage I paid for everything – the house rent, food, electricity – as well as sending money to my mother for the education of my sons back home in the Philippines (not from this marriage). Because of several calls and threats from the banks, I have became so restless and worried about my situation. I'm sure that if I do not do anything I will end up in jail. I am really desperate to find out who can help me get a loan to consolidate all my debts so that I pay a lesser monthly instalment. Then I can still go on with my life with my two sons. CM, Sharjah

Debt panellist 1: Ambareen Musa, the founder and chief executive of Souqalmal.com

Dh150,000 worth of debt on a salary of Dh5,000 is definitely high. However, with the right approach and intention, you can get yourself out of it.

Accessing conventional debt consolidation could be a challenge, since your Debt Burden Ratio looks very high. But there are other ways you can use to negotiate a solution to your debt problem with banks.

Since you’re unable to keep up with the monthly repayments, you should definitely approach the banks and speak to them about restructuring the terms of your loans. This will help lower your instalments and extend the tenure, so you can get some wiggle room. Outstanding interest on your credit cards must be multiplying because of the high interest rates, so you should talk to the card providers regarding converting these cards into fixed interest loans, which you can repay monthly.

Keep an eye out for “0 per cent interest balance transfer” offers. You can transfer your outstanding balance on both credit cards to a new card that offers 0 per cent interest for the first three to six months. But make sure you try your best to repay the bulk of the outstanding amount in that interest-free period.

Is there any scope of getting an interest-free loan from your employer, and if not, maybe a few months’ salary in advance? This money can be used to offset your expensive credit card debt first, as you figure out how to tackle the other debt.

With a salary of Dh5,000, you will have to find creative ways to cut back and save money. Does your employment contract permit you to take up extra work on the side? You can look for a part-time job or freelance for a few months to unlock some additional income, at least until the time your financial situation improves. Other ways to cut down expenses could include moving into an cheaper accommodation and, hard as it may be, moving your kids back home to a cheaper school so you can reduce remittances.

Debt panellist 2: Alice Haine, personal finance editor at The National

Surviving the financial wreckage of divorce is never easy, but it’s even harder when you appear to be the one left with all the debt. If you were fully supporting your husband during your marriage, then my first advice is to sit down with him and work out some kind of financial settlement. You should not be shouldering these debts on your own. You may even need to seek some legal advice and while this may sound costly, there are some legal companies that will offer counsel on a pro bono basis. DIFC Courts, for example, offers a weekly pro bono clinic. The next sessions are on November 9, November 15 and November 23, from 9am to midday at building No 5, office 301 of the Dubai International Financial Centre. Just turn up, as it is on a first-come, first-served basis. For more information, call [phone].

The next step is to approach the banks. You need to be completely honest with the banks and stress that in your current circumstances you are unable to meet your debt obligations. Hopefully they may will agree to a more suitable repayment schedule that will help you manage your liabilities and your general life expenses to avoid racking up even more debt.

If you want help negotiating with the banks, there are a couple of avenues you can take. A newly launched website called savememoney.ae, offers advice to those with heavy debts. Alternatively, a handful of debt rescheduling services now exist, that will negotiate with the banks on your behalf. One example is Lotus Loans and Rescheduling Services. For a fee, it helps debtors agree to better repayment terms on their liabilities. If you do use a rescheduling service, check the fees before you sign up to make sure you are not taking on any unwanted financial commitments.

At the same time, you need to cut your costs as much as possible and supporting your family in the Philippines will need to be examined closely. Can you reduce what you send home to your mother? Can family help out at all, at least in the short-term while you get yourself back on your feet? And how can you cut your expenditure in the UAE? These are all critical questions you need to ask yourself, as you are in a very delicate situation right now.

The Debt Panel brings together four financial experts: Jamal Alvi, the chief credit officer at Abu Dhabi Islamic Bank; Ambareen Musa, the founder and chief executive of the comparison website Souqalmal.com; Rasheda Khatun Khan, a wealth and wellness planner and founder of Design Your Life; and Keren Bobker, The National’s On Your Side columnist and an independent financial adviser with Holborn Assets in Dubai. Together they answer queries in a weekly online column to help readers better tackle their debts. If you have a question for the panel, write to [e-mail].

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