I invested Dh95,000 in a joint venture partnership with a food company last year. The contract and payment were all completed in the summer last year. To my disappointment, the person I went into business with is now very hard to reach and keeps on giving me false promises. After one year, the food franchise has not launched and no transactions have taken place. I found out that the partner sold the business last December without informing me. She said it was to survive financially. Three months ago she promised to pay me back but she is waiting for the funds from her home country to do this. She is now unreachable and I am now struggling with my current loan payments because of this dishonesty. In total I owe: outstanding amount / monthly payment
• Loan in the UAE: Dh228,000 / Dh6,271
• Mortgage in my home country of Belgian: Dh123,000 / Dh1,700
I earn Dh13,375 working in administration and also support my husband, who has lost his job. There are a lot of firings at my company, so my job is also at risk. My monthly expenses include Dh1,550 for transport as well as up to Dh2,000 a month for groceries for a family. I have complained about this woman to the fraud department and the police, but in the meantime how do I stay on top of my debts? HL, Abu Dhabi
Debt panellist 1: Shaker Zainal, head of retail banking at CBI bank
You have two main issues here. Firstly, your investment is at risk, due to the issues faced with your business partner and secondly, you are struggling to manage your debt obligations. On the first issue, you have done the right thing by formally complaining to the relevant enforcement authorities. With such applications, it is important to provide all legal documentation and evidence to substantiate your claims. This will hopefully increase your chances of recovering your receivables.
On the second issue, your household income is under stress, due to your husband currently being unemployed. Your best option is to approach both of your creditors and ask for a restructuring. For the loan in the UAE, banks here might help you restructure your loan with a reduced monthly instalment amount and longer tenure. Your mortgage in your home country can also be restructured, as the bank there has a tangible collateral for this loan and may therefore accommodate your request. You can also request your home country bank to temporarily accept interest-only payments for the next six to 12 months, which would reduce your monthly cash outflows considerably. Alternatively, seek a three-month payment holiday, while your investment issue is sorted out or your husband finds a new job.
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Debt panellist 2: Keren Bobker, an independent financial adviser with Holborn Assets
You say that you had a joint venture partnership but if this was the case, surely the trade licence and bank accounts would have been in both names? If so, the other party would not have been able to sell the business without your agreement. Your rights will depend on the wording of the agreement but I am concerned that this alleged joint venture was not set up properly. In such a case, I would expect the other party would not be able to dispose of the business in this way without your approval.
You need to take proper legal advice regarding a potential breach of contract and to request the repayment of monies owed to you. If you do indeed have a proper agreement and, dependent on the wording, you may be able to register a formal police case for debt against the other party. This could prevent her from leaving the UAE - a course of action that is important as if she leaves it will be far harder to recover what you are owed. Certainly, it is right from an ethical perspective that you are repaid the money that you put into this business now that it has been sold.
In respect of your debts, thankfully your monthly payments are not as high as many cases we see. As things stand currently, based on an income of Dh13,375, the two repayments represent just under 60 per cent of your total earnings.
It is important to keep up the repayments of your UAE personal loan as failing to do so will have serious consequences. Obviously getting back the money you are owed will solve this problem but quick calculations show that you may be able to reschedule your current UAE outgoings to reduce your currently monthly payments.
Your total repayments must be no more than 50 per cent of your total earnings, so as not to breach the Central Bank of the UAE’s Debt Burden Ratio but this appears viable. This is only a short-term solution, and you must bear in mind that there may be a bank fee attached to the rescheduling. Also, remember, the longer it takes to repay a loan the more it costs, but it could give you some breathing space for the time being if you are able to reduce your monthly loan repayments by Dh1,500. An option to repay part of this debt without penalty would also be useful as it can then be reduced once you receive the money that you are owed.
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Read more:
The Debt Panel: Single mother of four is being hounded by debt collectors over Dh43,000
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Debt panellist 3: Rasheda Khatun Khan, a wealth and wellness planner and founder of Design Your Life
Business misconduct can become a huge set back, not only financially but physically and emotionally too. Being able to address all three areas will help you move forward.
First let’s take the financial aspect. Contact the bank your loan is with and explore options of restructuring. Request an extension on the loan term so you can reduce the monthly repayment to make it more affordable. Be sure to go to the bank equipped with your numbers - know your expenses, explain that your husband has been made redundant and ask them to suggest options for you.
Also make time to help your husband find a new job. Determination goes a long way in this process. Use the fear and anxiety as fuel to motivate him to find something. At the same time focus on adding more value and doing an amazing job at your current company. Make yourself so valuable that it would be hard for the company to make you redundant. Job security is something of the past; only you can ensure your own security by adding skills, talent and experience to your CV. Usually when there are redundancies, there are reshuffles. Perhaps explore the opportunity of a promotion or a higher paid position within the company.
On the physical level, pursue your police case. Follow up and do what you can to see it through. Go the legal route too. Make your case by collecting every email and correspondence in relation to this matter. Find out your options to recover your money, after all it is owed to you.
When it comes to your other lifestyle expenses, what can you reduce or eliminate. It's time to cut back, so consider options around the house in Belgium. Perhaps it makes sense to sell or downgrade the property? If you have equity in the property perhaps you can secure some lending that way. You can dramatically bring down the monthly commitment to make it more affordable on your income.
Give yourselves a timeline. How long would you wait it out for? If your husband does not find a job here, what would be your next plan?
On the emotional level, find ways to make peace with the loss and what turned out to be a bad decision. Often we get stuck on the resentment, regret and anger with ourselves for making such a ‘bad move’. Push this aside and take it on strategically. Ask yourself what did you learn in this process? What’s good about this situation? If you really answer these questions, you can push aside what was and focus on what can be.
Make sure you do this together as husband and wife. Again many of us try to tackle this alone and take responsibility building even more anxiety between you. Work as a team and support each other to get through. With this state of being, you can consider with a clear mind and, in turn, make better decisions.
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
