The Debt Panel: Unemployed Abu Dhabi nurse’s bills pile up as she struggles to repay Dh57,000 debt

The nurse owes Dh46,000 on a personal loan and Dh11,000 on a credit card.

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 officer of Abu Dhabi Islamic Bank, provide insights on why people are getting into excessive debt, how this situation can be resolved and where they can turn for help. Ravindranath K / The National and Marwan Alhammadi / The NationalShow less

I am a nurse and I am currently being hired by a new company. I took out a personal loan with a UAE bank when I was with my previous employer. The total outstanding balance is Dh46,000 and my monthly instalment is Dh1,517. I have always been careful about paying on time and using my credit card as well. However, I have had a few months of unemployment between two jobs. While at first I was able to pay off my loan, and meet the monthly credit card bill, unfortunately in the fifth month of unemployment I was not able to pay my debts. My credit card now has an outstanding balance of Dh11,000. I am now approaching my sixth month of unemployment and the bills are piling up and I have no one to borrow from. I resigned from my previous company because they were downsizing and since I had another company to transfer to, I preferred not to be terminated. I have approached the bank's collections department about my situation. I asked if I could resume payment when I'm working and they told me they can't do anything about it. The collections department started calling my friend and informed her they'd file a police case against me even though I'd spoken to one of the bank's agents a week before. The delay in my employment is because my new employer has not yet issued a visa and they cannot assure me of my commencement date. How can I arrange anything with the bank to prevent further worsening of my case? I have no intention of running away from my debts but I need more time. KR, Abu Dhabi

Debt panellist 1: Rasheda Khatun Khan, a wealth and wellness coach

First things first, keep following up with your new employer. Be sure that it is a confirmed position and so the issue is caused by an admin delay and not because they have changed their mind about the position. Also keep your options open, look for other jobs in case this one falls through. Ask within your network if there are any cash-in-hand jobs you can do to make some money. Employers often look for some freelance workers for odd admin jobs, so be on the search for an option like that. Perhaps you can turn to family for some temporary financial support. You always want to have a back up plan.

Next, approach the bank again. Keep all your communications and visits documented, so whoever you speak to can always see the full thread of the case. Many bank employees make decisions based on that specific visit or call so make sure you always keep a record yourself. Share a copy of your employment offer letter to give supporting evidence that regular income is pending, at which point you can resume repayments. Offer them a reduced repayment. Also, see if you can reschedule your credit card onto your personal loan so you can mange that better in the future too.

Once you do start your new job, you must build an emergency fund. Taking out a loan or any form of credit comes with responsibility. As soon as there is a hiccup, which in life there always is, you want to remain in a secure position. An emergency fund allows for this. Put a set amount away every month just to build your emergency fund. This is as important as paying for any other bill; in fact paying yourself first is the most important bill. Going forward revisit your expenses and see what can be cut back on. Be sure to match your numbers, as in your expenses cannot exceed your income.

Many UAE residents today are simply living beyond their means. This is one of the major causes of long-term debt. It’s a cycle trap that stems from their psychology around money. Lesson one: spend within your means. Lesson two: make smart decisions when it comes to taking out lines of credit; and lesson three: always save at least 10 per cent of your earnings and set it up to ensure that is the first thing that happens after you get paid each month.

Debt panellist 2: Ambareen Musa, founder and chief executive of Souqalmal.com

Paying the bills and sustaining yourself financially while being unemployed is no easy task, and having debt on top of that can make it a very stressful time to cope with.

Create a survival budget with nothing but the essentials, and then make debt repayment a priority, especially high-interest debt that is draining your savings in interest payments. In your case, the outstanding balance of Dh11,000 on your credit card would have already started accumulating heavy interest.

With reference to your personal loan, you will have to be persistent in your communications with the bank. Since the collections department is working for the bank, try to reason and negotiate with them. Show the bank that you have never missed payments before you lost your job and that you are facing genuine financial hardship now. Talk to them about a deferred payment schedule and securing a penalty-free payment holiday for two to three months.

We assume that you’ve exhausted most of your savings, going six months without any source of income. How about approaching a close relative for an interest-free loan to help you out during the next few months, at least until your start your new job.

On the personal front, have you considered ways to generate another income stream? While you are waiting to start your new job, a part-time job as a private nurse providing at-home nursing care for patients or the elderly, could generate some cash to help you out with your monthly bills and debt payments.

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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