How our Debt Panel helped make a difference to lives
Four readers reveal what happened after The National's advice team offered them advice
Helping UAE residents resolve their debt issues has been the mission of The Debt Panel from its launch in April 2016.
Our experts have offered financial advice to more than 130 debtors, to help those struggling with chronic liabilities find a way out of their financial mess.
But what happens after the advice is delivered? We meet four of the people who turned to our panel this year to find out how their situation has moved on:
Sumera Hasan, a single mother of four, from Pakistan, wrote to The National in May because she was receiving up to 10 calls a day from collection agents over a Dh43,000 liability. The Dubai resident signed up for a loan and credit cards to help pay for the delivery of twins in April 2013. But her life took a downward spiral after she and her husband lost their jobs and he later left her to raise their children – a son, 14, daughter, 7, and 5-year-old twins - on her own. She managed to secure a job as a researcher earning Dh16,000 a month and started repaying her debts. However, by then the bank had outsourced the debt - which had mushroomed to Dh90,000 due to fees and charges - to a collection agency. After The National published her story, the bank agreed to accept a settlement against the debt of Dh25,000, which was generously paid off by two British readers as part of their zakat payment during the holy month of Ramadan.
The situation now:
Ms Hasan says her finances are “very much under control since the debt burden was lifted off my shoulders". She is now managing to make ends meet and says she will stick to her “commitment to never take on any debt in the future”.
“The Debt Panel taught me the importance of managing finances more carefully, avoiding as much as possible getting trapped in debts and the importance of saving money for tough times,” she says.
However, she admits that balancing the books is not always easy. She still earns a salary of Dh16,000, which is eaten up by the expenses of everyday life in the UAE, such as the Dh5,000 she spends on rent and Dh6,000 for school fees.
“It’s not easy for a single-income household to survive anymore, as inflation in Dubai rapidly continues to be on the rise,” she says. “My budgeting is pretty much inflow/outflow, salary to salary, with no room for extra expenses but we are able to survive within our means.”
However, Ms Hasan is now considering moving to another country to ensure her children’s future security.
“I don't foresee my stay in Dubai long term as expenses are on the rise and my salary increase is minimal," she says. "I would not want to go back to borrowing to survive in Dubai, I've learned that the hard way.”
RE, a marketing executive from the Philippines, contacted The Debt Panel in June when he felt he had run out of options. At the time, the Sharjah resident – a married father-of-two - owed more than Dh150,000 on a loan and five credit cards. While he had converted all of the credit cards to loans to secure fixed monthly instalments, he needed to restructure the loan payments as well, to ensure he could successfully pay off all the debt. The lender refused, with different departments telling him different things. With the loan repayments about 28 per cent of his salary, he was fearful his debt would spiral out of control once again.
The situation now:
RE says he is now “in a better situation” after the bank where his salary is credited finally agreed to a consolidation loan in October.
“The bank recently eased up on the requirements for top-up loans for existing account holders such as myself,” he says.
However he had to improve his credit score first to secure that offer. So, with the help of his wife and moving/delaying some payments such as rent and school fees, he paid more than twice the minimum on a credit card from the same bank to improve his position.
“Fortunately, I finally got approved for a Dh250,000 consolidation loan in October, which allowed me to close all my credit cards (except the one with the bank), pay off my other debts (family and friends) and catch-up on rent and school fees.
“I also lowered my credit limit on the other credit card from Dh18,000 to Dh8,000 only. My debt burden ratio now is down to 46 per cent with only one liability (deducted automatically from my salary account) for the next four years.”
RE has no outstanding balance on his remaining credit card (this, he says, will only be used for online purchases and the monthly payment on his consolidation loan is Dh6,086.
“I have no intention whatsoever to get a new loan or credit card," he says.
His plan now is to stay in Sharjah with any "improvements" to the family's lifestyle to be sourced from extra income, such as bonuses or a salary increase. His Dh13,300 salary was recently boosted to Dh14,000.
“The Debt Panel has been a great help for me in terms of seeing everything in perspective," he adds. "Each case you tackle has new lessons that can be applied in our own situation. The main take away from reading the Panel's advice is that prevention is the best cure and discipline is key. Unfortunate events do happen, we just have to be prepared for them.”
The compliance director contacted us in May this year because he had an outstanding loan of Dh380,000. He left the UAE in April 2017 after losing his job and had asked the bank to reschedule the monthly loan payments as his salary in Europe was much lower. The bank’s collection officer agreed to payments being paid, after a drawn-out negotiation, and promised it would not file a case with the police. However, the officer later retracted his statements leaving MF with a police case and no agreement on his debt.
The situation now:
MF says the situation is “still complex and not resolved” and there is still a police case against him. However, he is now making regular monthly payments of about €1,000 (Dh4,181).
“It’s an extremely painful experience,” he says. “The people in the bank don’t seem to care about getting their money back. I called the bank so many times, and every time they come back with the same feedback and same people.”
MF also says some of the advice offered by the panellists was “optimistic”. He referred particularly to the advice of contacting more senior bank personnel to help resolve the case.
MF says there is “no way” to be able to get in touch with staff further up the ladder at his lender.
He did use the advice of getting in touch with a debt management agency that could negotiate on his behalf. However, this was not a favourable experience for him either.
“It was also painful,” he says. “I probably sent 10 reminders/emails, but these guys seem to have lots of business and they don’t need more.”
AK, a British mother of two young children, was pregnant with her third child when she contacted The National in July. Her husband lost his job in the corporate wellness sector in Dubai on 2016, plunging the family into crisis. While he was earning Dh7,000 part-time, she earned Dh12,600 in the retail sector. However, they owed Dh440,000 on four loans and five credit cards, with two banks threatening police cases over non-payment. At the time their monthly expenses included Dh100,000 a year for rent and Dh2,500 for their car and Dh600 for phone bills per month. The Dubai resident was most worried about the court fines and the pending police cases.
The situation now:
AK says the situation is “the same if not worse as a civil case [which comes direct from the accuser rather than via police] was filed against me during my eighth month of pregnancy”. They still owe the same amount of money, although a few of the banks have given them more time to repay their debts.
While their jobs and salaries are the same, they did take on the advice to move into a smaller home. AK says they have not managed to stay on top of their repayments but they have avoided taking on any more loan.
She says The Debt Panel’s advice did not teach her much as “no bank was willing to give me a consolidation loan”.
She adds that she is better at budgeting now, as they are “not spending on anything additional”.
Updated: December 25, 2018 07:44 PM