My dear friend faced a distressing situation this morning when the HR department at her workplace received a call from a third-party debt collector, contracted by the bank, regarding her long-overdue credit card and personal loan payments. The challenges of the pandemic and some family financial difficulties had made it impossible for her to meet her payment obligations on time.
She said that the collector assigned to her account displayed a shocking level of rudeness, resorting to threats and intimidation. It's disheartening to think about the toll such actions can take. I advised her to email separately the bank and her company HR department on this.
Many lives have been lost because of the immense pressure debt collectors can exert on emotionally vulnerable individuals. Very emotionally weak debtors resort to total withdrawal. Those who manage to survive often find themselves unable to sleep at night and unable to lead normal lives due to the immense stress caused by these situations.
The burden of debt can be overwhelming, especially when faced with aggressive debt collectors. In the UAE where expatriates make up a significant portion of the population, understanding your rights and responsibilities regarding debt is very important.
This blog aims to shed light on the legal aspects of debt and collections, offering guidance to debtors and addressing the unlawful practices of collectors.
I find this article "UAE credit card dues: Fines, travel bans; all you need to know" lifted from Khaleej Times very helpful. The takeaways --
Your Debt and the UAE Law
When you've taken a personal loan or have a credit card in the UAE, you enter into a contractual agreement with the bank. This agreement includes terms and conditions, often involving post-dated security cheques. Failing to pay three (3) consecutive installments or six non-consecutive ones can trigger a default event, as per UAE law.
Article 4(4) of the Personal Loan Agreement, as defined by the Central Bank of the UAE, states that the loan becomes immediately due if these conditions aren't met. Consequently, the bank may deposit your security cheques, leading to criminal charges if they bounce due to insufficient funds.
Travel Ban and Criminal Offense
A bounced cheque is considered a criminal offense in the UAE under Article 401 of Federal Law No. (3) of 1987. This can lead to a travel ban and even detainment upon re-entry into the UAE.
However, if the cheque amount is less than Dh200,000, you might face a penalty ranging from Dh2,000 to Dh10,000.
Paying this penalty can lift the travel ban. However, the bank may file a civil case to recover the outstanding debt based on your signed personal loan agreement, potentially leading to detainment upon re-entry if you're outside the UAE.
Private Debt Collection Agencies
Banks in the UAE sometimes employ third-party private debt collection agencies to recover debts. While these agencies can contact defaulting customers, they must adhere to the law. Threatening is illegal under Article 353 of the Penal Law of UAE. It provides --
Whoever threatens another by words, acts or signs, in writing or verbally or through another person and in instances other than those stated in the two preceding articles, shall be sentenced to detention for a term not exceeding one year or to a fine not in excess of ten thousand dirham.
If you are a debtor facing such harassment, you have the right to file a police complaint against the collection agency, either in the UAE or, if the agency is based in another country, in the relevant jurisdiction.
Negotiating Installments to Settle Debts
If you're struggling with debt, you can request the bank to allow you to settle your outstanding amounts through installment payments.
It is essential to obtain an assurance that the bank will issue a 'No Due Certificate' once your debt is repaid.
Seeking legal advice in the UAE is advisable for professional guidance in such matters.
Dealing with debt and collectors can be daunting, but understanding your legal rights and responsibilities is empowering. Remember, while debts must be repaid, it should always be done within the boundaries of the law.
Debtors have rights, and collectors must adhere to the law. By staying informed and seeking professional advice when necessary, you can navigate the challenging world of debt more confidently and live a stress-free life.
Artur Davis said,
This time, instead of moving oceans and healing planets, let's get our bills in order and pay down the debt so we control our own future.
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Note: This blog is meant for informational purposes and does not constitute a legal advice. It is recommended to consult a legal practitioner in the UAE for personalized guidance on your specific situation.
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Image credits: Pixabay | Stevepb
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