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Abu Dhabi, UAEMonday 17 December 2018

Can I repay my personal loan from another country?

The reader wants to move to the UK and continue paying off her debts from there

The wife's estranged husband regularly signed up for new credit cards that he then used to spend excessively. Antonie Robertson / The National
The wife's estranged husband regularly signed up for new credit cards that he then used to spend excessively. Antonie Robertson / The National

If someone takes out a personal loan in the UAE, can the monthly payments be made from a different country? I took out a loan of Dh280,000 over four years and have monthly repayments of Dh6,500. I am planning on leaving the UAE to settle in the UK in the next year. Is there a possibility I can continue paying from the UK? Or do I need to settle the full amount before leaving? JN, Abu Dhabi

While banks prefer customers to repay loans in full before leaving the UAE, not least because it is harder and more expensive to chase up defaulters outside of the county, it is not necessarily essential. A bank will be aware that employment has ended - assuming the loan is with a bank to which salary is paid each month - but this does not necessarily signal that someone us leaving the country. When the final salary payment is made, and it should legally be marked as such by the employer, the bank account will be frozen and any balance, including any end of service gratuity will be set against the outstanding debt. Unless the bank is aware that someone is planning to relocate, they will not take any further action. But if they know someone is leaving and likely to leave behind substantial debts, they can apply to the courts for a travel ban, although this will not necessarily be granted. JN should advise the bank of her plans to leave and make an arrangement with them regarding future payments.

It is possible for monthly payments to be made from outside the UAE and the lender’s main concern should be that payments are being met and the debt repaid. JN needs to be aware there will be additional costs on monthly payments made in a different currency, so must ensure that the net amount paid is in the correct amount.

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Read more from Keren Bobker:

Can I backdate my newborn daughter's health insurance cover?

Will I receive less UAE gratuity for resigning before three years?

Can I renew the residency visa of my special needs son after he turns 18?

Repatriation is not an obligation if an employee resigns

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I left my old employer on December 31 and started a new job in early January. Both are well-known companies. At the start of December, I went to an Emirates NBD branch to discuss the visa process change from a bank perspective as I was aware my bank account would be put on hold due to my loan. I was initially told once I could provide my new residence visa, Emirates ID and a salary transfer letter, these items would be uploaded into the system and within two working days all would be released.

On January 20, I visited another branch, with the relevant documentation, knowing that my end of service gratuity would hit the account soon and was told all would be sorted within 48 hours. The gratuity was paid on February 5 but, when I visited the branch the next day, I was told the bank needed to see my first salary payment, contrary to what I had been told previously.

I received a call telling me I had agreed to these terms, something I disagree with, and I suggested a middle ground to clear my credit card to avoid charges. Staff looked into this but then I was told the request had been refused and none of my money would be released until my first new salary payment was received. What can I do? PF, Dubai

I referred the query to my contacts at Emirates NBD and two days later PF contacted me to advise that some of his money had been released so he was able to settle his credit card without being penalised for late payment. A number of days later a spokesperson for the bank said: “We are pleased to inform you that our group customer experience team provided Mr PF with the necessary clarifications. We would like to clarify that as per the Bank’s policy, customers who have exited their previous employment are required to present the Bank with their new employment documents. Upon receiving their end of service benefits, a lien is placed on their account to recover any liabilities that they may have with the bank. The Collections team shall review the provided documents and take the necessary decision whether to release the lien or not. However, as a service gesture for the customer’s relationship with Emirates NBD and on an exceptional basis, the bank has arranged to release part of the EOSB to Mr PF. The remaining amount will be released post credit of his first salary."

PF is happy with the outcome, but residents need to be aware that banks are getting stricter in terms of retaining money to cover debts when someone changes job to reduce potential future problems in recovering monies owed.

Keren Bobker is an independent financial adviser and senior partner with Holborn Assets in Dubai, with over 25 years’ experience. Contact her at keren@holbornassets.com. Follow her on Twitter at @FinancialUAE.

The advice provided in our columns does not constitute legal advice and is provided for information only.