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Abu Dhabi, UAEFriday 16 November 2018

The Debt Panel: 'I paid back my missed payments, so why does the bank not recognise this?'

The Dubai document controller says his repayments are not reflected on his loan balance

Illustration by Mathew Kurian
Illustration by Mathew Kurian

I work as a document controller in Dubai and borrowed some money in June 2017 to help support my family back home in the Philippines. I earn Dh5,750 a month and missed three payments on my loan earlier this year.

My case was then forwarded to an external collections team, who hounded me for payments everyday. They even came to my office and asked me to sign some cheques, otherwise they said they would speak to my HR.

In July, I paid Dh3,000 via the collections company my bank had assigned, something I was instructed to do to regularise my loan payments. In the months after, the bank deducted more sums that came to a total of Dh17,000. I asked the bank to confirm why they had taken this amount and when would I see the repayment reflected, to which they said that I was not going to see the adjustment made on my online statement. After numerous calls to the bank and visitations, they still are not able to clarify the adjustment.

I am not an expert in accounting, but I can see after all the deductions being made, that it is not at all summing up. I am still getting hefty interests and charges and being deducted. My credit card statement is not lowering either.

I believe I have made all the necessary repayments and my loan has been regularised, but I don't understand why Dh17,000 was taken when the Dh3,000 should have been enough? Did the collections department alert them to this payment. I questioned them again and again and the customer service asked me to check with my bank, which I did and the bank told me to call the customer service. After all this, and being told different stories about how they adjusted the payment, I still wasn't convinced. I told them that the consolidated report does not show any kind of adjustment made to my account.

My debts are:

Loan: Dh28,000 (I pay Dh1,200 monthly)

Credit card: Dh13,000 - (I pay Dh1,500 monthly)

My monthly expenses include:

Room rent: Dh1,200,

Remittances: Dh500

Groceries: Dh500

I hardly go out and when I do, I stick to a budget. What questions should I be asking the bank to resolve my situation? MN, Dubai

Debt panellist 1: Shaker Zainal, head of retail banking at CBI

The interest and other charges applied by banks on overdue payment cases are based on the contractual agreements signed between customers and banks at the time of loan drawdown. Therefore, the first thing you need to do is to check your loan agreement and familiarise yourself with the terms and conditions of overdue payment charges.

Secondly, you did not mention whether you have verified the authenticity of the external collection agents before making payments to them. You need to ensure they were legally authorised to make collections on behalf of the bank and validate that this was not a fraud attempt. If you haven’t, then I suggest you contact your bank and verify this.

The next step is to visit your branch in person and ask bank staff to take you through the relevant calculations in detail. Show them the receipts of the payments you have made to the collection agents. Then request the bank officers to provide you with your monthly account statements and walk you through each transaction. If you have paid less than the minimum amount payable on your credit card statement in any month, you may have incurred additional charges on your card as well; so you should review all transactions in both your loan and credit card accounts separately.

You need to ask your bank, how much overdue charges were debited on your loan and credit card accounts, what were the basis of these charges and finally how much of your payments to the collection agents or the bank were deducted from your outstanding loan amount or credit card balance. These should help you reconcile your payments with the charges incurred and the outstanding balances.

Banks do take customer complaints seriously and I am sure your bank will make every effort to clarify your questions. If you are still not satisfied, you can escalate your complaint by discussing your case with a more senior supervisor or the branch manager. Banks also have specialised collection units, which deal with such cases. You may request a meeting with the collection unit representative, if you are unable to resolve your queries in the branch.

In addition, if you feel your monthly instalment is too high due to your increased expenses, ask the bank to restructure your loan, which will help you reduce your monthly cash outflow by extending the tenor.

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Read more:

'I have a new job in Saudi Arabia - can I repay my UAE loans from there?'

'After two redundancies, 70% of my Dh22,000 salary goes to the banks'

'I signed up for three credit cards because my income did not match my expenses'

Single mother earning Dh5,500 owes Dh155,000 to banks and private money lenders

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Debt panellist 2: Ambareen Musa, founder and chief executive of Souqalmal.com

Debt collection can be a murky business. Collection agents resort to all sorts of scare tactics to intimidate borrowers and get them to cough up as much money as possible. Coming to your workplace and threatening to report you to your HR department is unfortunately one of the more common tactics used by such agencies. However, the one big mistake you made was to write the cheques without coming to a formal written agreement for settling your debts.

It's shocking to hear that you haven't seen the Dh20,000 you paid, make any sort of a dent in the Dh40,000 worth of debt you owed. The math just doesn't add up. The lump sum payments you made to the collections agency should have gone towards settling the outstanding interest, principal and late payment penalties. Have you applied for a detailed loan statement showing all your repayments from the loan start date? As for your credit card, any payments made towards the outstanding balance should have been reflected in the monthly card statement. It would also be a good idea to apply for your detailed credit report and review it for changes in your outstanding debt.

Since you haven't been able to get a satisfactory justification from the bank for a while now, you could consider enlisting external help. One option is to approach debt management agencies in the UAE, such as Lotus Loans & Overdues Rescheduling Services You can use their credit counseling services to come up with a plan of action. These agencies may also be better positioned to speak to your bank and get some answers regarding how your payments were used. Further, they could also help you in coming up with a repayment strategy to pay off the remaining debt you still owe. However, be aware that these services come at a fee, and there is no guarantee you will get the solution you want.

Another option is to get legal help if you're still unable to figure out where your money ended up. The Philippine Consulate in Dubai and the Philippine Embassy in Abu Dhabi provide free legal aid and counselling for Filipino expatriates dealing with debt-related issues in the UAE. The former also runs weekly legal assistance clinics, and you could visit them for a consultation armed with all the documents you can find pertaining to your debts.

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Read more:

Start-up will help UAE residents borrow money they can afford to repay

The Debt Panel: Single mother of four is being hounded by debt collectors over Dh43,000

A nine-step guide to help you renegotiate bank debts in the UAE

How an Abu Dhabi resident took three UAE banks to court and cleared Dh700,000 debt

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Debt panellist 3: Rasheda Khatun Khan, a wealth and wellness planner and founder of Design Your Life

First, collect all the documents including your statements showing payments, emails, loan agreements and settlement agreements both from the originating bank and the collection agency. Do this for both your loan and credit card. Next, organise the order of events and then note down the following questions:

• What is my current outstanding loan balance?

• What are the outstanding payments I have yet to make?

• Is the loan still with the collection agency?

• What is my current monthly repayment and the loan's end date?

• What interest rate am I being charged every month?

• How much of my monthly repayment goes towards reducing the capital?

• What other fees are associated with the loan and the credit card?

Ring the bank and check which branch has customer service mangers you should go to see. I recommend booking an appointment with a customer service manager in the right department. Take your documents and the above questions and explain your confusion.

Taking out loans and credit cards should be done with careful consideration. Saying "yes" to a loan means committing a part of your monthly salary to be spent at the bank. This means saying "no" to spending it on something else. You must ensure adequate income is left to pay for your expenses, including budgeting for unexpected events, savings and creating an emergency fund. Without these you simply leave yourself short.

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