Abu Dhabi, UAEMonday 26 August 2019

The Debt Panel: ‘My husband has no job, I'm pregnant and we owe Dh440,000'

The Dubai couple borrowed the money to pay rent and medical bills but now they are struggling

Illustration by Alvaro Sanmarti
Illustration by Alvaro Sanmarti

I am a British mother of two young children and am currently pregnant. I am crying out for help as my husband, from South Africa, lost his job in the corporate wellness sector in Dubai two years ago and since then we have been in a financial crisis. While he does part-time work earning about Dh7,000, I earn Dh12,600 in the retail sector. This places most of the financial commitments onto my shoulders. With only one salary coming in regularly, it is impossible to pay back credit card debts and loans.

The amount we owe is: amount owed / monthly repayment

Bank 1:

Loan: Dh100,000 (with a police case and threats of a civil case if we don’t pay Dh30,000)

Bank 2:

Loan: Dh75,000 (with a police case and threats of a civil case if we don’t pay Dh10,000)

Bank 3:

Loan: Dh55,000 (court fine of Dh10,000, which is not paid)

Bank 4:

Loan: Dh70,000 ( Dh2,000 monthly payment)

Credit card: Dh30,000 / Dh1000 per month

Bank 5

Credit card: Dh30,0000 / Dh1,000 per month

Bank 6

Credit card: Dh25,000 / Dh2000 per month

Bank 7

Credit card: Dh25,000 / Dh1,200 per month

Bank 8:

Credit card: Dh30,000 / Dh2,300 per month

Total owed: Dh440,000

The interest for each bank has increased due to non payment and the amount of threats and harassment we receive brings me to tears everyday. We both have police cases against us and are living in fear as we don’t have the money to solve these issues. We feel trapped and alone. The banks are now threatening civil cases against us if we don’t pay large amounts of money, which are unreasonable and unrealistic given that we are going through a financial crisis. We have consulted a lawyer, who also asks for money we do not have to help solve our issues. Some of the cases have resulted in court fines, however, the amounts are high and we cannot pay this. Our family is not well off so we cannot ask for their help. Living in fear everyday is affecting my health and pregnancy. We don’t know what to do or where to go. We borrowed the money to pay our rent upfront as we do not get subsidies from our employers. We also spent money on medical bills for our parents back home. Eventually, we took out more debt to pay for debt we already owed.

Our monthly expenses aside from rent (this is Dh100,000, which we pay in four cheques) are Dh1600 for groceries, Dh2,500 for the car, Dh9,600 to service debt and Dh600 for phone bills. I am most worried about the court fines and all the pending police cases. What should we do? AK, Dubai

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

It is unfortunate you have found yourself in a debt spiral, especially during pregnancy where stress should be minimal. Firstly, it would be prudent to inform both your employers’ HR departments about your debt circumstances to ensure a civil /police case does not jeopardise your employment.

Secondly, looking at your household income and expenses and the debt burden you currently have, restructuring each of these with various banks with reduced or zero interest and increased payback period may take some time, which you may not have due to the civil case. The best option is to approach one bank, who can buy out all your loans and credit cards into one loan at a smaller rate of interest and longer payback period, because your combined household income does stand a chance to service the debt.

If part of the funds you borrowed were used to invest or buy assets, then I would recommend you divest and use the proceeds to settle credit card dues, because of their higher interest rates.

You may also want to consider renting a cheaper apartment, as Dh100,000 rent does not look sustainable in your current financial situation. I understand your kids would find that difficult, but you can move back to your desired area/community once you are able to control your debts.

Alternatively, you could also speak to some private remedial / debt management companies in the UAE, who would engage with various banks to help you restructure/settle your debts and suspend any legal action until an agreement is made. However, be aware there would be service charges associated with this.


Read more:

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The Debt Panel: 'My husband borrowed Dh900,000 from family and friends. Now they want it back.'

Ramadan spirit: Generous readers clear single mother's debts after The National plea

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

On an income of Dh19,600 a month this is a very large amount of debt. It appears that much of it has built up since your husband lost his job. It is clearly unwise to take on large amounts of debt when you do not have the income to repay it. I assume your husband was previously the main earner based on your outgoings and borrowings.

Borrowing more money to pay debts that you already could not support was, frankly, a foolish move and as you were already over a sensible limit, and the guidelines of the UAE Central Bank, did you give accurate information to banks when applying? Had a bank been aware of your full financial position they would not have lent you more. I am also confused as to why you have paid for medical care for family when both the UK and South Africa have health care systems for residents.

Two years without a job paying the income you are used to is a long time and the sensible option would have been to leave the UAE once it became clear that a new job was not an option to avoid the debts reaching unmanageable levels. If there are now police cases registered, this is not likely to be a possibility now as this usually means there is also a travel ban.

Once you fail to make repayments for three months, any UAE lender is permitted to register a police case for debt, as non-payment of such liabilities is a criminal issue in the UAE. You say that the banks are ‘unreasonable’ but they are adhering to the terms of the agreement that you signed. It is one thing to ask a bank to give you some ‘breathing room’ when there has been a redundancy but no bank is going to be amenable over a long period, especially if no payments are being made.

The courts could retain your passports until inroads have been made with the debts and payments are made. I cannot stress how important it is to try and make the minimum payments each month. Without that, the banks will not listen to any entreaties to accept reduced payments and looking at the figures you will be unable to reschedule debts. You have to demonstrate that you want to repay the borrowings if you want the banks to be amenable.

I assume you will take the statutory maternity leave only as you simply cannot afford not to have your income for a period of time, not in your current poor financial position. The job market is not easy, especially as we hit the peak of summer but your husband needs to redouble his efforts to secure full-time employment with a higher salary. If you have no options to borrow from family, nor any assets that you can sell, increasing your income is the only way out. Rents are dropping so you may be able to reduce that outgoing and have more for the repayments. I have known people get out of substantial debts but only by working to increase their income and focusing on repaying what they have borrowed.


Read more:

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

Bounced cheques in UAE: new rules 'a progressive step for the justice system'

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


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

In your situation, it is important to balance the wellbeing of your physical and mental health and the financial dilemma you are facing. As you know high levels of stress during pregnancy can cause many unnecessary complications. Taking good care of yourself right now is going to be imperative so make time for that. This is the first step to tackling your financial situation.

Create space to sit still with an empty mind. For those moments totally ignore and blank out what is going on. Simply allow your mind and body to take rest from all the thinking and all the worry. This will not make it go away, but it will certainly put you in a better frame of mind to tackle the problem with a clear head. Give your body a rest too. Fear and stress also take their toll on the body, making you tired and unproductive.

Next, work together with your husband. Financial stress often causes marital stress too, so be conscious of each other's needs and feelings. You want to work together to get out of this situation not create further burden. It is time to really cut back. Consider downsizing your home to a smaller apartment, reducing your rent from Dh100,000 to around Dh50,000 at least temporarily. Downgrade the car or consider rental options. There are some summer deals for monthly rentals as low as Dh1,200 per month. Divert what you save on the rent and the car towards your debt repayments or fees.

Find a pro bono lawyer. A lot of lawyers set a number of hours aside to do pro bono work over the course of the year. Start with the Dubai International Financial Centre's pro bono clinic and find a lawyer you can work with.

It's a tough time in your household, focus on balance as your lawyer focuses on affordable settlements and repayments.

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: July 3, 2018 01:30 PM