Struggling debtors need understanding

Banks putting customers in prison for missed payments on their loans or credit cards because, for instance, they lost their jobs defeats the goal of them ever getting back their money, writes Felicity Glover.

Gary Clement for The National
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I'm just going to come right out and say it. Banks putting customers in prison for missed payments on their loans or credit cards because, for instance, they lost their jobs defeats the goal of them ever getting back their money.

Instead, lenders in the Emirates should be working with their customers to find a solution that is suitable to both parties, one that will give the person some breathing space and a chance to get back on track financially.

Throwing a person in jail is not going to achieve anything - not for the bank, which will have yet another non-performing loan on its books, nor for the customer, who could languish in prison for years because they can't pay back the money they owe.

Take Kerrin Matthey. Hers is a story like millions of other expatriates who came to the UAE during the boom times of 2006 and 2007, many of whom left their loved ones to bring their skills and experience to help build a country, to give their children and families a better life because they could work hard and save even harder.

But Ms Matthey's story is also one where it all went wrong after she invested in the Dubai property market back in 2008. Just like tens of thousands of other investors who have lost their life savings on developments that never materialised or have been delayed by years. Not only has she lost it all, she is also facing jail.

But, unlike many others in a similar situation, she has chosen to stay - rather than fleeing in the middle of the night for the safety of her home country - to try to put things right.

"I've been told to leave the country, but I won't because I'm not like that," says the widow and mother of two.

Ms Matthey came to the UAE from the United Kingdom nearly seven years ago to work as an interior designer for a large property management company in Dubai. She did the interiors for many of its showroom apartments, as well as travelled around the region to work on other design projects for her firm.

She worked hard, sometimes seven days a week, but she was able to save. She wasn't your typical high-flying, overpaid expat. She was earning Dh32,000 (US$8,711) a month - a large salary for some; possibly average for others - but far from those ridiculously high wages of the boom days.

By the time 2008 came around, Ms Matthey had saved enough that she could consider putting down a deposit for an apartment in an off-plan development in Dubai that had been recommended by a colleague.

"He said it was a 30 per cent down payment and nothing more until completion," she says. "That appealed to me because I didn't have to worry about a mortgage."

She had to borrow from two banks to supplement her deposit - and this was her first mistake - but it was a dream that she'd been working towards for a couple of years and it was in sight. She also had a good job and, more importantly, she could afford the repayments, support her children back in the UK and still live a decent life here.

She decided on a two-bedroom, 1,863-square-foot duplex at a total cost of Dh1,890,945. So far, she has paid Dh567,283 to the developer.

Ms Matthey's contract with the developer states an "anticipated" completion date of December 31, 2009. But, nearly two-and-a-half years later, she says she is still waiting for construction to start.

However, the developer's spokesman insists that construction has started and the completion date is "expected within 14 months".

Despite the delay, Ms Matthey had her job. And while she'd rather have been in her new home and just paying her loans off rather than also forking out for rent, she was staying above water.

But then it all fell apart. She was made redundant and stopped working last November.

She contacted one of her banks, the Abu Dhabi-based First Gulf Bank (FGB), in December to initiate talks in the hope of restructuring the loan she had with them. She says her request was refused. She continued using her savings to meet her loan repayments. She was looking for a job, but she knew that if she couldn't find one fast, her money would run out.

And it did. She says she was still trying to talk to FGB about a restructuring. The bank's collection department in Dubai was still saying no.

After three years and paying off Dh180,000 of the Dh250,000 loan, she missed her first payment in February. She missed her next payment in March. She was able to scrape enough money together to make a partial payment of Dh3,400 on April 12. Now, at the end of May, she's about to miss her third full payment.

Her other loan, also for Dh250,000, with Dubai Bank has been paid on time every month since she lost her job because her end-of-service gratuity of Dh44,000 was deposited in her account with the lender. However, that money runs out at the end of this month.

On April 19, she received notification from FGB that it was recalling her loan and she had to settle the total amount of Dh71,200 still owing. That figure has since increased to Dh71,534.24, according to FGB.

A spokesperson for FGB says Ms Matthey is more than 90 days past due on her payments and her loan is a "non-performing asset as per Central Bank policies".

"We have spoken to her on several occasions trying to give her a workable solution," the FGB spokesperson says. "However, she is not willing to pay more than Dh1,000 per month."

Ms Matthey says Dh1,000 is all she can afford until she finds a job and that she has been receiving threatening phone calls from FGB's collections department in Dubai. She says they told her that she'd never work here again. That she'd go to jail. That they were screaming at her to give them back "my money".

"I haven't been able to get a job and I've been trying very hard," Ms Matthey says. "But this is actually very draining on me; FGB has been contacting me on a weekly basis."

She says the stress of the calls is taking a toll. And she finds it difficult to keep her composure when she talks about it. And no wonder. Nearly two weeks ago, she received a phone call from Al Naif police asking her to come down to the station because a complaint had been lodged against her.

"I was told to bring my passport and I went because I was scared," she says.

"I got there and said to them that it can only be from First Gulf Bank. And it was. But they said I was at the wrong police station, so they handcuffed me and put me in the back of a van and took me to Muraqqabat.

"I was crying. I was handcuffed."

One of her friends lodged her passport with the police as surety. Ms Matthey also surrendered her passport and she was allowed to go home.

But she was back at Al Muraqqabat Police Station last Sunday because her friend was going on holiday and needed her passport.

"They told me I had to go to prison now. But then they asked me how much I owed and said I had to see the prosecutor. I was lucky because I had with me FGB's recall notice, which said I only owed two payments.

"I showed it to the prosecutor and he said Dh19,950 wasn't enough to put me in jail; that I could go, but they would keep my passport.

"It was just luck - it was a weekday and the prosecutor was there."

Ms Matthey is waiting for her court date to be set. In the meantime, she's still trying to find a job - and a way to pay pack her loans.

One option is the cancellation of the development she invested in. This is unlikely, however, because - despite the construction delays - it can only be done by the Real Estate Regulatory Agency.

Under law, the developer would then have to return the money to the project's investors. She says she'd use this money to pay the banks.

"I don't want pity; I just want what's right," she says. "I'm not a victim and I'm here to pay my dues. But I am sure the right thing will be done by a person who has the authority."