‘Financial counselling and community support are crucial in hard times’
Counselling, financial advice and emotional support is crucial for families caught in limbo and unable to pay off debts.
Helping such people, who may be depressed, is a social obligation, said K V Shamsudheen who advises Indian workers on financial planning in a weekly radio talkback programme.
“Each of us, whether social workers or as individuals, can play a role in talking to people we believe are in trouble,” Mr Shamsudheen said. “Many people are stuck because, unless they settle the cases against them and pay their debt, they cannot leave.
“They want to apply for amnesty but they are in a debt trap.”
Mr Shamsudheen said an Indian social worker took his own life in Ras Al Khaimah last week after his business failed and he was forced to send his family home. He said men like that could be saved if they were given the support they needed.
“We need to reach out to people so they think of other solutions and such cases do not recur,” Mr Shamsudheen said.
Lawyers and social workers said residents must repeatedly be warned against issuing post-dated cheques and security deposits if they did not have enough funds to cover them.
Post-dated cheques are commonly used as a form of guarantee or security in commercial transactions in the UAE and held in expectation of receiving payment in the future.
Such cheques are used to guarantee payment for housing, school fees and car loans. They are also used as collateral for sales on credit to suppliers, dealers and distributors.
Writing a cheque that bounces can result in fines or jail time in the UAE.
In November last year, Dubai Courts reduced the punishment to only a fine if a bounced cheque is valued at Dh200,000 or less.
Reducing the offence to a misdemeanour ensures that non-fraud cases of residents in debt are handled more leniently and that they can continue working to pay off their debts rather than being jailed.
But for the rest of the country, a bounced cheque is still an offence punishable either by jail or a fine, depending on the nature of the case and the amount.
Under the new directive, a case can be filed if the first cheque bounces in an instalment payment.
Additional cases cannot be filed for the remaining cheques that bounce in the same payment.
Lawyers said that in several cases, loan sharks or rental companies deposited the remaining cheques in banks in another emirate to start another bounced against the borrower who was already deep in debt.
“The cheques are being deposited in Sharjah instead of Dubai because it’s difficult to immediately find out that it’s part of the same transaction,” said Barney Almazar, a director at Gulf Law and head of legal aid at the Philippine Embassy.
About 515,000 bounced cheques with a value of about Dh26.2 billion were handled by the UAE Clearing Cheque System during the first five months of this year, Central Bank data shows.
This were 31,000 fewer bounced cheques compared to the same period last year.