The Debt Panel ‘I have not been paid since January. How can I apply for insolvency?’
▶ With debts of about Dh300,000, the Abu Dhabi resident has run out of options and turns to our experts for help
Ineed some advice about my situation. I work for a company in Dubai that has not paid my monthly salary of Dh14,000 since January. They put me on unpaid leave from April and there is no sign that I will be able to return to work soon.
I have a personal loan and six credit cards from different banks, which I managed to keep paying with my savings and help from family. I am on payment plans for some of them and have also been given between one- and three-month deferrals from April because of Covid-19.
My debts are:
Loan: Dh88,456 (Dh3,400 monthly instalment)
Credit card 1: Dh18,418 (Dh1,800 monthly instalment)
Credit Card 2: Dh35,074 (Dh3,000 monthly instalment)
Credit Card 3: Dh52,841 (Dh2,650 monthly instalment)
Credit Card 4: Dh24,260 (Dh1,490 monthly instalment)
Credit card 5: Dh22,361 (Dh578 monthly instalment)
Credit card 6: Dh54,200 (Dh2,318 monthly instalment)
Total: Dh295,610
I am not in a position to resume the payments now that the three-month deferrals have come to an end and I am being hounded by collection agents.
I recently read an article in
The National about an option to file for personal insolvency in Abu Dhabi.
As an Abu Dhabi resident, can I avail myself of this facility and secure some sort of standstill agreement with the banks so I can start paying back as soon as my company settles my dues and starts operating again or until I find another job?
How can I take this matter to the courts to apply for personal insolvency and are there any pro bono legal services that can help me?
All the lawyers I have spoken to regarding this have huge fees that I cannot afford to pay. I am not a habitual defaulter and I do not plan to run away from my debts.
I just need more time to resolve this. WA, Abu Dhabi
Debt panellist 1 Taronish Mistry Associate at BSA Ahmad Bin Hezeem & Associates
The situation you are in is unfortunate given the impact of the pandemic. However, we note that your company has not paid your salary since January, which was before coronavirus-induced restrictions came into place. You should file a complaint with the Ministry of Human Resources and Emiratisation for the late or unpaid salary, especially for the period before you were placed on unpaid leave due to the pandemic.
It is in the best interests of the banks that you do not default. It is uncertain whether you have communicated your more recent situation to the banks. If you do have any combination of the loan and credit cards from a single bank, some offer the option to restructure and consolidate loans to give you some relief in the short term. You will probably end up paying off the debt for a longer period and with higher overall interest.
Whether or not the banks will co-operate is uncertain, so it is usually worth engaging a debt management company that can negotiate with the banks on your behalf. Having a job is important, so do your very best in that area.
If all else fails, there is the insolvency route. The new UAE Insolvency Law may allow you to negotiate a settlement plan, which is usually up to three years, with the banks under the supervision of a court-appointed mediator or expert.
If you approach the courts to file for this process, you will need to present statements that show your financial status, income sources, your profession, assets, names and addresses of all creditors or lenders and details of the loans and bank transfers made up to a year before the date of application. It is important to note that you will also have to present a proposal as to how you intend to pay the debts. The court will then consider the funds necessary to support yourself and your family. A court-appointed expert does have the ability to sell your property to pay off your debts.
This procedure is generally going to be more extreme than settling the matter through negotiation with the banks.
Even under the UAE Insolvency Law route, you will still have to pay court fees and expert fees. The relevant banks to whom at least Dh200,000 is owed individually or collectively, can file for the Debtor’s Insolvency and Liquidation of Funds if they have served you with a notice to pay the due debt and you have not done so for 50 working days from the date of the notice.
Debt panellist 2 Ambareen Musa founder and chief executive of Souqalmal.com
When it comes to financial relief measures launched by banks for borrowers affected by the Covid-19 pandemic, we have noticed that banks are, in many instances, willing to offer a restructured repayment plan to borrowers who continue to struggle financially after the three-month payment holiday has expired. So, it may be worth reaching out to your primary bank, explaining your circumstances to them and asking for relaxed repayment terms.
However, since you have several credit card debts with different banks, this negotiation will have to be handled separately with each bank. You could consider working with a licensed debt management agency to help with the negotiations.
As for the decision to file for insolvency as a way to tackle your considerable debt commitments, you may want to seek the opinion of a legal expert first.
In case you would like to receive pro-bono legal advice first, you can approach the Abu Dhabi Judicial Department or your home country’s embassy or consulate for a free legal consultation.
An alternative to this is to consolidate your existing savings and liquidate some assets back home to gather the funds to pay off the banks. Banks may be willing to lower the outstanding loan amount and waive some fees in favour of a lump sum.
Coming to the matter of delayed salaries, have you considered taking this issue up with the appropriate government authorities? Based on whether your company is registered in mainland Abu Dhabi or within a free zone, you can submit a complaint with the Ministry of Human Resources and Emiratisation, or directly with the free zone authority.
If other colleagues have been affected in a similar way, raising a dispute collectively can help you put some pressure on the employer to release your salaries. And if the dispute cannot be resolved, you will be redirected to take the case up in the Labour Court. Since your employer has not clarified whether they will release your overdue salary and when, taking this step may help you negotiate with the employer better.
While you continue to keep an eye out for new job opportunities, also stay on the lookout for part-time or freelance work opportunities to help you unlock an income stream and manage your financial commitments better.
Debt panellist 3 R Sivaram executive vice president and head of retail banking products, Emirates NBD
This is a very challenging time and the additional burden of delayed salary payments and indefinite unpaid leave is indeed stressful.
My advice would be to discuss your situation with your employer and ask them to clear your unpaid dues to allow you to address your coming instalments. This is very important and would give you time until you are able to find suitable employment.
It would also be best that you communicate your situation to the banks. You could inform them that you are committed to clearing your dues and request an additional moratorium period on your loan and monthly card payments to allow yourself time to become more financially stable.
With respect to your question around filing for personal insolvency, it would be best to contact a lawyer familiar with the matter and seek guidance.