My brother was arrested for outstanding debts and served several three months in prison in Sharjah before being released. He initially owed US$70,000 but that has grown to $91,000 with interest; he took the loan out five years ago. He has been in and out of work over the last three years due to mental illness as he has suffered a nervous breakdown. He is currently being treated in a Dubai hospital for his illness, where he has been for the last two-and-a-half months. He has no money to pay the hospital or the bank and the bank is unwilling to negotiate his loan to a reasonable plan that is affordable to repay. If this was done we would then be able to have his travel ban lifted so that he can come home to the US to seek help for his mental issues. Putting a payment plan in place seems like a win-win situation for my brother and the bank because my brother cannot work with his mental state. We have tried working with the US embassy but need some more advice. As well as being financially broke, he is mentally broke. What can he possibly do? Any suggestions would be greatly appreciated. BT, United States
Debt panellist 1: Keren Bobker, The National's On Your Side columnist and an independent financial adviser
This is an exceedingly tough situation. From a legal perspective, he owes money to the bank and they can continue to add interest and late payment penalties but there are times when humanity needs to take priority. A loan of $70,000 is Dh257,000 which is a substantial amount, which has now since increased to Dh334,000. I do not know which bank this is or whether the US Embassy has approached them on his behalf but only very senior staff would be in a position to make any decisions.
From the bank’s perspective, the money was lent in good faith with the expectation that repayments would be made in accordance with the agreement signed by both parties. A lack of payments is a breach of contract and the bank is concerned that monies may not be repaid. They would have requested a travel ban to stop the borrower from absconding and not repaying the money owed and this is not uncommon practice.
I understand that the borrower and his family have asked for a repayment plan but do not know the terms. The bank will be concerned about a lack of guarantees if he leaves the UAE, and there is no collateral to secure the personal debt. Has the family offered any kind of guarantee? Are they able to make a partial payment on his behalf? These things will help.
As the situation stands the situation is never going to improve for any party. This means the bank will not get any money back and I would suggest that they should take a compassionate viewpoint in this case and try to seek a solution. Clearly their debtor is unwell and unless the stalemate is broken the bank won’t see any of their money back and the situation will only get worse. These are extraordinary circumstances and so the bank needs to be merciful and allow him to leave the country to seek medical treatment, and allow him time to pay back the money owed. Faith can often be repaid in many ways.
Debt panellist 2: Philip King, head of retail banking, UAE for Abu Dhabi Islamic Bank
It is important that you engage with your bank to talk through this case, and try to establish a new framework for resolving the issue – which should involve rescheduling payments to a level and a time frame that can be manageable for your brother. It is very likely that as part of this arrangement, the bank will ask for someone to act as a guarantor for your brother’s outstanding debts. That is something that must be considered very seriously. Frequently, people want to help a friend or relative and end up saddled with a large debt burden. There must be full trust, monitoring of payments, and possible redress worked out between the debtor and the guarantor in case of missed payments. It is important when talking to the bank that you give full details of the circumstances, as it is possible that the bank would take an ad hoc decision to be lenient.
The Debt Panel brings together four financial experts: Philip King, the head of retail banking in the UAE at Abu Dhabi Islamic Bank; Ambareen Musa, the founder and chief executive of the comparison website Souqalmal.com; Rasheda Khatun Khan, a wealth and wellness planner and founder of Design Your Life; and Keren Bobker, The National's On Your Side columnist and an independent financial adviser with Holborn Assets in Dubai. Together they answer queries in a weekly online column to help readers better tackle their debts. If you have a question for the panel, write to pf@thenational.ae.
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