UPDATE: What the new insolvency law means for you
A new law to protect anyone unable to pay off their personal debt from becoming bankrupt was passed by the UAE Cabinet on Sunday.
The federal law protects Emiratis and residents in debt from legal prosecution and decriminalises their financial obligations, offering them an opportunity to work to remove themselves from debt and support their families.
The law comes into force in January and will help debtors settle their financial obligations through a court appointed expert. The expert will co-ordinate between the debtor and creditors to come up with a plan, lasting no longer than three-years, to settle the financial liabilities. During this period, the debtor will be prevented from taking any loans until the court decides — upon the request of the expert, the debtor or any of the creditors — that the debt has been settled.
The law also contains special provisions that contribute to the swift completion of legal procedures and reduces the fees charged for rescheduling and restructuring the debts, in an attempt to find a fair compromise for both creditors and debtors.
The aim of the law is to enhance the creditworthiness of the UAE and, in the long run, its future growth prospective. It also aims to enhance the competitiveness and strength of its economy by ensuring an environment that encourages entrepreneurship and provides favourable conditions for doing business, reported state news agency Wam.
The law, which complements existing financial laws, will contribute to increased transparency, in terms of civil debt repayment transactions, and will ultimately strengthen the UAE's position as an ideal hub for investment, where the rights of all parties are guaranteed.
UPDATE: What the new insolvency law means for you