The Debt Panel: Single mother earning Dh5,500 owes Dh155,000 to banks and private money lenders

The Dubai resident acted as a guarantor for friends, who later fled the country leaving her to pick up the bill

I am a single mother in considerable debt with a son to support back home in the Philippines. My problems started three years ago when I tried to help some friends by offering to be their guarantor for a private lender they had borrowed from.  The private lender was also a friend of mine; she would lend at an interest rate of 10 per cent per month, so whenever people needed money I would refer them to her. She asked me for guarantee cheques, so I agreed because I trusted the people that borrowed from her.

Sadly, many of the borrowers ran away leaving me with the debt. They blocked me, turned their phones off or returned to the Philippines. This meant I was left to handle the debt. This led me to take on bank debt to try and pay back the money; I eventually took out a buy-out loan but I am struggling to pay that back too and it was still not enough to cover the amount I needed to pay the private lender.

In total I now owe:
Bank loan: Dh115,000 – I do not always make the payments

Credit card: Dh5,000 (plus penalty for late payment)

Private lender 1: Dh15,000 plus 15 per cent monthly interest

Private lender 2:  Dh10,000 plus 10 per cent monthly interest

Private Lender 3:  Dh5,000 with 15 per cent monthly interest

From friends : Dh5,000

Total: Dh155,000

I earn Dh5,500 working in sales and my company will only give me 25 per cent of my salary as a cash advance. What should I do now? The bank is threatening to come to my office; I owe everyone money and I’m struggling with the rent and to pay for food and I also have my son’s school fees to meet. I think I’m going mad. SB, Dubai

Debt Panellist 1: Philip King, head of retail banking at Abu Dhabi Islamic Bank

It is so saddening to hear of your position and how people have taken advantage of your generous spirit. Your story is a warning to anyone who finds themselves in a similar position - do not make personal guarantees for other people’s financial situations, however close you feel you are. Circumstances can change for the worse, and people can not always be trusted.

Private lending schemes are illegal, and the rates they charge will be a huge strain on personal finances. And because of their underground nature, the methods used to recoup money are also dubious, highly threatening and probably illegal. In your situation, it is important you firstly talk to your bank to explain that you are committed to paying back your bank loan and the credit card debt. Ask the bank to come up with a schedule of repayments that is manageable for you and allows you to pay back the credit card debt first, because this is where late payment charges can build up the fastest. I am not in a position to give you advice on how to negotiate with the private lenders, but it is important that you ensure you stay safe.


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Debt panellist 2: Steve Cronin, founder of, which helps residents invest their own money

You have discovered first hand what a terrible situation private lending can create. I know it is common in many communities here in the UAE but it is illegal. The interest rates are so high that the debt quickly spirals out of control and the borrower is forced to run away. You were wrong to refer people to a lender (whether for commission or otherwise) and also to trust the borrowers and guarantee them. It is sad seeing you in this situation when you were originally trying to help people out.

You must focus on your bank debt and credit card debt if you want to stay in this country, as they are bound by regulations and the law. Not making regular payments will make it very hard for you to negotiate with the bank. Do not be tempted to add to your credit card debt to cover living expenses. Meet your bank and explain your situation – try to come up with a plan for paying the money back regularly over time.

If there are any ways for you to boost your monthly income, you should investigate them. This includes seeking a new job, taking on extra responsibilities, finding ways to generate commission, taking admin jobs online, helping friends – whatever you can. I appreciate this is easier said than done.

With the private lenders, know that their activity is illegal and you are protected by law. There are law companies such as Gulf Law that help Filipinos get out of private loan debts. If the lender has your passport or Emirates ID, you can send them a demand letter stating this is illegal and report them to the police. They face a penalty of Dh20,000 if they do not return it. If they have a cheque of yours as security, even made out to their name, you can go to a police station to report it lost or stolen. They will give you a report that you can take to your bank branch requesting a stop on the cheque and then nobody can cash it.

Any contract you have signed is not valid and can be nullified in court. If they are harassing your family in your home country, this is an admittedly tricky situation but you can have them reported to the police at home even if they live in the UAE. Most private lenders resort to harassment because they cannot legally enforce payments.


Read more:

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A nine-step guide to help you renegotiate bank debts in the UAE

How an Abu Dhabi resident took three UAE banks to court and cleared Dh700,000 debt


Debt panellist 3: Ambareen Musa, founder and chief executive of

Offering a personal guarantee for multiple borrowers and putting your own financial security on the line was obviously a very bad decision. With the borrowers now gone, the money lender will have no interest in pursuing them because you've already written cheques and embroiled yourself in other people's debt debacles. Instead of just doing as you're told by this money lender, you should consider getting legal aid to help you deal with her. Private money lenders operate illegally within the UAE, and it isn't uncommon for them to resort to intimidation and illegitimate tactics to get their money back.

The Philippine Consulate in Dubai and the Philippine Embassy in Abu Dhabi both offer free legal aid and counseling for Filipino expats dealing with debt issues in the UAE. The Philippine Consulate General in Dubai runs weekly legal assistance clinics every Wednesday afternoon. You can simply walk in with all the documents pertaining to your debt commitments and seek legal guidance on how to manage these.

Now coming to your bank debt - the personal loan and credit card - you are making matters worse by making delayed payments and skipping some of your instalments altogether. Late payment penalties and penalty interest will only expand your debt. You must reach out to the bank and credit card provider to negotiate a restructured repayment plan and explain to them that you're unable to keep up with your current debt obligations.

With reference to your credit card debt, negotiate a fixed-interest, fixed-tenure repayment plan to at least get rid of the accumulating interest. Loan repayments can also be made more manageable if you're able to secure an extension of the loan term as well as a reduction in interest rate.

On the personal front, can you reach out to family members and friends who would be willing to extend an interest-free loan to you? It is also obvious that your current salary is not nearly enough to allow you to cope with your debts. You must think about taking up a part-time job or a freelance work assignment to boost your income. That being said, your expenses should also be kept to a bare minimum to free up enough cash to be used towards your repayments. You could ask a close relative to help bear the expenses of your son's education back home, at least until you have managed to get rid of the bulk of your debts.

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