UAE debt stories: Filipina housemaid sees no way out as loan sharks circle

In the first of a three-part series on rising levels of personal debt, we talk to Angelina Cruz, a 39-year-old housemaid who owes Dh12,000 to loan sharks and is struggling to meet the monthly payment demands.

Our first case study is a situation many in the UAE find themselves in. Silvia Razgova / The National

Angelina Cruz knows there is only one way out of her predicament, but she is not yet ready to go to the police.

The Filipina housemaid, 39, who asked for her name to be changed for the article, has amassed a Dh12,000 debt to two loan sharks and is barely managing to pay the 15 per cent interest charge each month, equivalent to an annual rate of 180 per cent.

“I have been paying already for nearly a year,” says the mother-of-three who has lived in the UAE for seven years. “I just need to do something, otherwise even if I work for 10 years I won’t be able to pay it off because it will keep going up.”

Her money troubles are shared by many in the UAE. The National has seen a spike in the number of letters asking for help since it started running a series of articles on escalating levels of personal debt in July.

According to the Al Etihad Credit Bureau, 3.15 million UAE residents (almost one in three) are living in debt, and almost all of them have more than one loan.

Now, in a three-part series starting today, we are sharing the stories of three of our readers to further highlight the growing issue of over indebtedness.

Ms Cruz’s money troubles started in 2013 when she left her employer, for whom she worked for four years. She secured another job, but left after two weeks as she did not like the family. It took her two months to find another employer, during which time her expenses piled up.

“I am a single mum. I am separated from my husband. So I don’t have anyone to help me financially because we were also renting a house in the Philippines at that time,” she says.

“I asked my friend if she knew someone I could borrow money from, because I can’t take a loan from the bank. I have only a Dh2,500 salary in my job [and] need at least Dh5,000 and then a salary certificate for three months and a bank account [ to get a loan from a bank].”

A friend arranged for her to borrow money from a gentleman Ms Cruz has never met, acting as an intermediary and guarantor for the loan.

She initially borrowed Dh2,000 and was making the Dh300 repayment each month, but after borrowing about Dh2,000 more she soon ran into trouble because of family problems and could not cover the increasing instalments. As a consequence, each time she missed an instalment it was added to the principal loan amount.

She now owes Dh7,000 to the original lender and Dh5,000 to her “friend”, the guarantor, for missed payments on the original loan – in total three times the amount she borrowed. And she has already been paying the loan back for a year.

“I don’t want to have a problem with them, for them to give me any trouble, especially with my employer. So sometimes I borrow from others so I can pay the interest,” she says.

Ms Cruz and her son, who together earn Dh4,700 a month, have to pay Dh1,800 a month just to cover the interest on the loans. And if they do not pay, the guarantor for the original loan withdraws the interest payment each month from the ATM card of Ms Cruz’s son.

“We are paying Dh1,300 for the bed space, and with the transportation and food we can’t really send money back home and I am feeling bad for my [two] children back home because they are suffering,” says Ms Cruz.

“Most of my friends tell me to report them to the police, but I know they have a family back home to support. I don’t know where to turn. I can’t sleep at night.”

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