Abu Dhabi, UAETuesday 15 October 2019

The Debt Panel: 'I won't alert my lender before leaving the UAE. Will this be an issue?'

The Abu Dhabi nurse, who owes Dh35,000 on a credit card loan, is relocating to the US and wants to repay her debt from there

Illustration by The National 
Illustration by The National 

I owe Dh35,000 on a credit card and am about to resign from my nursing job in Abu Dhabi to work in the US where I have received a better offer. I will keep making the monthly repayment of Dh1,629 from the US, however, the card is not from the bank where my salary is transferred so I do not plan to tell them I am leaving the country.

I was struggling to repay the card so I had it converted into a loan. To date I have not missed any payments and I have really good intentions to repay everything from overseas.

Once my company cancels my residence visa, will I be held or questioned at airport immigration when I exit?

I will be earning $4,500 a month in the US, which is about Dh16,500. I cannot pay before I go as I do not have enough to clear it. However, if I continue repaying the monthly instalment, the debt will be paid off in 24 months.

I borrowed the money to pay for expenses in my home country. While I will not tell the lender I am leaving before I go, I have no plans to run away from the debt. I’m afraid to tell them as I’ve heard they may stop me leaving. I will make sure there are no late payments or penalties on the debt before I leave. Will I face any issues? I’m afraid immigration will find out that I have outstanding dues and stop me leaving. MA, Abu Dhabi

Debt panellist 1: Ambareen Musa, founder and chief executive of Souqalmal.com

You have three factors working in your favour. First, you haven't defaulted on an active debt. Yes, you had your outstanding credit card debt restructured, but you have also made all repayments under the new arrangement. Second, since you haven't defaulted on the loan, you're in no danger of the bank filing a police complaint or legal charges against you. Third, with no legal charges against you and no reason for your primary bank to request a travel ban, you should be in the clear when it comes to exiting the UAE.

There have been many cases of expatriates successfully repaying their outstanding UAE debts from overseas.

Ambareen Musa, Souqalmal.com

That being said, there's always that element of risk. You are after all planning to leave with unpaid debt and without the knowledge of the lender in question.

Ideally, you should inform the credit card provider about your plan to leave the country and your intention to repay from the US. To support your case, provide them with a copy of your new employment letter. Also, give them your forwarding address for any future correspondence, or maybe the office address if you don't have a residential address yet. Being forthcoming with the bank will ensure you're not leaving the UAE with any loose ends.

There have been many cases of expatriates successfully repaying their outstanding UAE debts from overseas. In fact, many lenders have no problem with being repaid from anywhere in the world as long as the borrower has a credible repayment track record, has proven his/her ability to fulfill debt repayment obligations, and is not leaving behind substantial debt (thereby increasing credit risk for the bank). A good way to demonstrate your commitment towards repaying the bank is to use your end of service gratuity to partially pay off the outstanding loan.

Eventually, if you come to an agreement with the credit card provider, it would be best to get it in writing. This formal letter should be enough to allow you to exit the country without being stopped at immigration.

Debt panellist 2: Shaker Zainal, head of retail banking at CBI

It is not recommended to leave the UAE without openly discussing the new circumstances with the bank and agreeing on how to move forward.

Since you have a good payment history, it should be possible to reach a mutually agreeable arrangement to either settle the account or maintain the payments from the US. The bank may ask you to provide a local UAE resident as a guarantor and will also likely ask for evidence of your employment in the US, as well as a forwarding address and contact details.

You will also need to make arrangements to transfer funds to the credit card/loan account from overseas, since non-residents are not allowed to maintain current accounts in UAE. The alternative would be to maintain a savings account in the UAE.

You should not face problems leaving the country, unless there is a police case or travel ban imposed on you.

Remember, there are consequences if you default and the accumulation of interest plus late payment/ over limit excess charges could be high. These charges can snowball very quickly in the event of no payment. In such a scenario, the bank would also likely engage an external collection agency in the US to pursue collection efforts outside of the UAE.

Remember, once all your outstanding debts have been paid, obtain a clearance letter from the bank. This documentation should be retained and an up-to-date credit report from the Al Etihad Credit Bureau obtained to validate that there are no outstanding debts showing. This can be sourced from the AECB app. You should note, it can take up to a month for the records to be updated.

Debt panellist 3: Keren Bobker, an independent financial adviser with Holborn Assets

I am pleased that you are intending to repay the money you have borrowed. When a residence visa is cancelled, banks are not informed of this and the only bank that will be aware of the change of situation will be the one to which your salary is paid as your last payment must be marked ‘final salary’. Unless your employer has been asked as part of the loan agreement to forward this information to the bank where you have your debt, and this is unusual, they will not be aware.

A bank cannot place a travel ban on an individual, but if they believe that someone is going to leave the country and not make payments, they can apply to the court for a travel ban. The bank has to make a case to the court but as you have not missed any repayments, their case will not be strong. The amount owing is not large, compared to many outstanding debts, so that weakens a case too. That’s if the lender even becomes aware of your intended departure.

If someone has an outstanding debt, it does not mean that they cannot leave the UAE. If that was the case, people wouldn’t be able to go on holiday or visit their home country. Banks naturally want monies borrowed to be repaid and provided that is the case, you should not have an issue, provided there are no outstanding payments and the bank has not become aware and registered a case against you. For peace of mind, you may want to check with the Immigration Department the day before your departure but I think it unlikely you will have any issues.

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

Updated: August 13, 2019 10:08 AM

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