I worked in Dubai for 15 months and then left suddenly in January last year due to a family problem in Sri Lanka. During my time in the UAE, I took out two personal loans from two different banks along with corresponding credit cards but after I left, I was without a job for almost a year. I could not meet my repayments, so the debts have grown to:
Loans
Bank 1: Dh29,933
Bank 2: Dh43,561
Credit cards
Bank 1: Dh8,000
Bank 2: Dh5,000
Total: Dh86,494
Now I have a job at a hotel resort in the Maldives with a small salary and I wish to repay $100 a month to each bank. However, both banks are refusing my offer and one wants to file a case against me. In previous months I was paying higher amounts as I was receiving good tips, but it is the off-season now so the tips are lower.
I don't want to skip my loan payments but I can only afford a little each month due to my low salary. Here I earn $600 (Dh2,203) compared to the Dh4,500 I was earning in the UAE. I borrowed the money because my wife said she had a family emergency and her brother would settle the debt. But her family cheated me and I will not get the money back; her brother used the money to illegally migrate to Europe but he was caught. I cannot take action against them because my wife is threatening divorce and I do not want to lose my daughter. How do I get the two banks to accept my offer? DV, Maldives
Debt panellist 1: Shaker Zainal, head of retail banking of CBI bank in the UAE
Your first objective should be to clear the outstanding debt you have accumulated on your credit cards, as you will continue to be charged a high rate of interest on these.
Initiate a dialogue with your banks and in your discussion demonstrate the full extent of your liabilities and current monthly payments along with a well thought out repayment plan. Your plan should take into account your salary, current financial commitments and monthly expenses.
You can discuss the potential to convert your remaining card debt into the existing personal loans to create a consolidated single monthly payment. At the same time, you should discuss the option of decreasing your monthly payments and try to agree to a programme of repayments, which are both achievable and sustainable on your current budget.
Given the situation in which you accumulated debt, it would make sense for your family back in Sri Lanka to contribute to your repayments, no matter how small the amount might be. Is your wife currently in employment? Can she take up full time or even temporary employment, at least until you pay off your outstanding debt in the UAE? Alternatively, do you have any assets or do you have any other investments that you can sell? Doing this will give you access to some extra cash to put towards settling your debts in the UAE.
To summarise, try to clear your credit card debts first. Approach your banks and ask them to consider consolidating your card debt into your existing personal loans and ask whether you can lower the monthly repayments. Strive to minimise your expenditures and manage your costs until you are back on track with your repayments, and, if possible, sell any assets and use the funds you accumulate to pay your debts in the UAE.
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Debt Panellist 2: Ambareen Musa, founder and chief executive of Souqalmal.com
To be able to negotiate a repayment plan in your favour, you must demonstrate the intention and ability to repay your debt. You must also be realistic in your expectations and be prepared to meet the bank half way.
Take into account your current monthly income and chalk out a budget to manage your finances prudently. Make debt repayment your top priority. Once you figure out how much you need to meet your basic living expenses, put the majority of what's left towards paying off your loans and credit cards.
It would be best to close the outstanding debt on both the credit cards as soon as possible. The combined debt on your credit cards is Dh13,000, which is not a huge amount as of now. But if you keep it lingering by only paying the bare minimum, it will keep accumulating interest at a very high rate and become harder to get rid of with every passing month.
Do you have any savings you could tap into or assets you could sell to free up enough cash to put towards the outstanding credit card balance? If you can't gather enough funds from your personal resources, you could also look into applying for a personal loan against your salary in the Maldives. This loan amount should be just enough to cover your credit card debt. Once the debt is paid off be sure to close the credit card accounts and ask the banks for a proof of closure.
If you cannot manage to pay off the credit cards altogether, request both the banks to convert the credit card balance into a fixed interest loan and consolidate it with your existing personal loan. The aim must be to negotiate a repayment arrangement that lowers your interest obligation the most.
It would also be a good idea to keep your job search in the UAE active, since you were able to earn a significantly higher salary here. Remember to stay in touch with the banks and keep the lines of communication open as long as you're dealing with them from overseas.
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Debt panellist 3: Keren Bobker, an independent financial adviser with Holborn Assets
Borrowing money for other people is rarely a good idea as it often ends with the borrower not receiving anything back and being left with the debt. It is doubly disappointing that a family member would take the money and that the rest of your relations have left you to repay the money on your own. As you borrowed the money, you are legally liable and I am pleased you want to repay the amount outstanding.
It is standard for banks to take action if no repayments are received after three months. A police case is often registered, which could go to court and lead to an arrest and/or a travel ban. As you are not currently in the UAE, and I assume you are not planning on returning, this is somewhat academic but even in this situation some banks will threaten this action to scare people into making payments.
I note that you have offered a monthly payment of $100, equivalent to Dh367, to each of the banks which I am guessing is significantly less than the full monthly repayment. A bank's main concern, however, is to get back the money owed, with interest, and my view is that a smaller payment over a longer period is much better than nothing at all.
I expect the people you have been dealing with do not have the authority to make a decision to accept this level of payment as they are simply tasked with getting customers to repay. You will need to speak to someone in a more senior position that understands the situation and will appreciate that small payments are better than none at all, particularly when someone is no longer in the UAE.
Once you have escalated your case to a bank employee that will consider your offer and allow some payments to be made, I suggest you ask for a suspension of interest payments although this is entirely at the discretion of each bank. If you are able to increase payments that would obviously be better and would reduce the debt sooner.
The Debt Panel is a weekly online column to help readers tackle their debts more effectively. If you have a question for the panel, write to pf@thenational.ae
