Debt trap can make you an illegal resident
Bank has the right to take legal action against borrowers who don’t pay up, lawyer says
Abank has the right to take legal action when a person defaults on a loan or fails to make the minimum payment on credit card bills, lawyer Ali Mosabah Dahi told Gulf News.
An arrest warrant may also be issued, Dahi said. “At the time of residency visa renewal, the General Directorate of Residency and Foreigners Affairs [GDRFA] has the right to refer such a person to the police who then take action, or refer him to the prosecution or whichever department he is wanted by.”
However, this does not mean that taking a bank loan threatens residence status.
“The only thing that links the two is the legal case against the individual,” Dahi said, suggesting that the defaulter should settle his legal status by clearing the debt or reaching an amicable settlement with the bank to withhold the arrest warrant or place his passport in custody.
“To avoid expiry of the visa, there is a common practice that could be upheld before the police, prosecution and court,” Dahi said, “The defaulter has the right to file a special request before the prosecution to have his residency renewed.
“The prosecution then sends a representative who meets with the defaulter at the GDRFA. The defaulter goes through the process of renewing his residency in the representative’s presence. After the visa is renewed, the defaulter surrenders his passport to the representative.”
Colonel Mohammad Saeed Al Fishiti, Head of Public Relations at Dubai Police’s Criminal Investigation Department, said the police file a criminal case on a bank’s complaint against a defaulter only in cases which involve cheques.
Person is contacted
“If there is no cheque involved or if the cheque is a guarantee cheque and it has that written on the back of the cheque, then the bank should file a case at the civil court,” he said.
When a criminal case is filed for a bounced cheque, the police summon the individual. “We try to solve it amicably. If the person can pay the money and does, the case is dropped. Otherwise the case is transferred to the public prosecution.”
In no case, he said, do the police ask the department of residency and foreigners affairs to cancel a person’s visa.
A GDRFA official told Gulf News that the department does not interfere with residential status unless there is a court order. “We do not impede visa renewal procedures unless there are orders from a court or the prosecution. Usually, a residency visa is renewed once an individual has settled a dispute with the accusing party,” he said. “We only cancel a person’s residency if a court’s final verdict mandates us to do so. We do not directly interfere with any defaulter’s residential status.”
C.N. a manager at a Dubaibased company, has seen many of his staff members in a defaulter’s dilemma.
“I blame both them and the banks,” C.N. said. “We offer banks clear statements detailing just how much our employees earn and how much their potential gratuity payments are. The statements are more than enough to calculate whether or not that person is capable of paying back the loan. Yet, I find that banks dole out a huge sum to people who obviously can’t pay it back.”
C.N. said even if a person can make the minimum payments on a credit card, for example, the interest on the balance accumulates overwhelmingly.
“Banks give out credit cards carelessly,” he said, “and people seem to accept them just as carelessly. I have an employee who has debts on five credit cards. Sooner or later, if he can’t pay the minimum amounts, the banks will file a case against him which will threaten his stay in the country. After that, all procedures of renewing that person’s residency will be impeded as he will be blacklisted.
“The bank first starts directly trying to contact the person or through his/her sponsor,” he said.
“Then the warning letters and notices start coming in. If the person persistently ignores these notices, the bank will be forced to lodge a complaint with the police or prosecution. Once a person is on the blacklist, he finds himself with two options: abscond or pay the dues. If he can’t do either, he’ll be faced with jail time and his visa status will be at risk. It’s a really simple formula with a simple moral: don’t take loans you can’t pay back.”