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Abu Dhabi, UAEMonday 10 December 2018

The Debt Panel: 'I lost my eyesight, now debt collectors are hounding me for Dh20,000'

The Briton, who was made redundant in February, says his vision was damaged by diabetes

Illustration by Mathew Kurian
Illustration by Mathew Kurian

I owe Dh20,000 on two credit cards in Dubai. I have not been able to pay for medical reasons as I lost my sight in one eye and the sight in my other eye is also bad. I used to work as a sales director but lost my job in February due to the owner not having any money. He declared himself bankrupt and now owes me one month’s salary and my end-of-service benefit.

I lost my sight in March due to diabetes-related issues, so I cannot work for now, as I am waiting for surgery on one of my eyes, and I have no income. The treatment is cheaper here than going private at home in the UK.

For one of my credit cards – on which I owe Dh15,000 – the bank is now sending me threatening letters via debt collectors. I have told both banks multiple times about my personal situation.

I am surviving on family donations and my expenses total £1,200 (Dh5,637) a month as I have a mortgage in the UK to pay as well. What is the best thing I can do as I have no income to pay these debts? DS, Dubai

Debt Panellist 1: Philip King, head of retail banking at Abu Dhabi Islamic Bank

Although your employer has declared himself bankrupt, it is likely he is still required to recompense his employees in accordance with UAE Federal Law. You should therefore strongly consider hiring legal counsel who can advise you as to your best course of action to obtain an equitable resolution for the month’s salary and end of service benefits you are owed.

If you currently do not make card payments, it is not surprising the bank is sending you letters. You are not fulfilling the terms you agreed to when you took out the cards. If you are going to be out of work for some time, which given your unfortunate medical condition seems likely, you should consider whether you can afford to continue living in the UAE without a job. You need to reflect on whether it is tenable to live off family donations, or whether you are better off selling your property and using the proceeds raised to pay off your debts. At present, your financial situation is not sustainable and releasing funds from a property sale, or through the sale of other assets, would quickly alleviate the precariousness of your position.

Selling your house will reduce the burden of mortgage repayments while ensuring that you have the financing available for your treatment and to clear the Dh20,000 you owe on your cards. In addition, it will provide long-term financial security for you to meet your rent and other monthly expenses, particularly when you are out of employment.

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Debt panellist 2: Keren Bobker, an independent financial adviser with Holborn Assets

I am sorry to read of your health issues and hope the bank may take this into consideration, especially as the amount owed is small. I suggest speaking to someone higher up at the banks, someone in a position to make an actual decision, rather than the front-line staff who are simply tasked with recovering a debt. Given the sums and your personal situation, a bank could agree to suspend interest and await repayment once you have had your operation and are able to take up further employment.

In respect of your mortgage payments in the UK, let them know about your situation. I suggest asking for a ‘payment holiday’ until you have a regular income again.

You state the owner of the company you were working for ‘declared himself bankrupt’ but there is no personal insolvency law in the UAE. The only legislation in existence relates to businesses and corporations. Furthermore, it was designed to assist companies struggling with bad debt, not as a way of simply winding up a business and not paying employees. It is also quite expensive for a company to take this route and I understand that as yet, the law is untested.

Have you registered a case with the Ministry of Human Resources and Emiratisation against the company for non-payment of monies owed? Anyone who is not paid by an employer should do this promptly as if the company is no longer trading the situation becomes far more complex. There may be an option to take action against the individual but you will need to take legal advice on this, and this also assumes that the company owner is still resident in the UAE.

You are a British national and you are right in your assumption that you are not eligible for free treatment under the National Health Service, as it is a purely residency-based system and you are not UK resident for tax purposes. Only emergency treatment is free for everyone and non-residents can be charged up to 150 per cent of the cost of treatment under current law.

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Read more:

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Debt panellist 3: Ambareen Musa, founder and chief executive of Souqalmal.com

Sustaining yourself for the last eight months with no source of income, and with medical expenses to cover on top of it has obviously put you in a tight spot financially. But simply looking at the amount of debt you owe, the situation does not seem too difficult to remedy, if you act soon.

One option would be to remortgage the house you own back in the UK. That means you are basically accessing your equity in the property i.e., the share you own in the total value of your home. So you can borrow against this equity, which may be easier to do if the property price has appreciated since you bought the place. Home loan rates in the UK are significantly lower than the interest rate you're currently paying on your credit cards. This could give you the cash you need to repay and close down your credit cards, pay for your surgery, and some more to stabilise your finances.

If that route is not feasible, consider offloading some of your assets or investments back home. It is extremely unlikely any investment would be earning you a return higher than the enormous interest you're bleeding on your outstanding credit card debt. You have to make it your priority to get rid of this expensive debt, and the sooner you do it, the easier it will be.

Next, tackle the expense side of things. Are you living with your family in the UAE? While your medical problems require at least your spouse or another family member to be here with you, you should move the rest of the family back home. You could relocate to a smaller and cheaper accommodation to save on rent and living expenses as well. Ultimately, you will have to stick to a very strict budget and look for every possible way to cut back on your expenses.

The Debt Panel is a weekly column to help readers tackle their debts more effectively. If you have a question for the panel, write to pf@thenational.ae