How to manage loans or debt during Covid-19

You can have a debt consolidation plan or restructure your loan

Are you struggling with debt? Here we look at some ways to take the stress away and get into a better place for the future.

Maybe you’ve been a little too generous with your credit card or you rely on it to pay those big costs that come up once or twice a year, but you just haven’t got on top of paying them back?

You are not alone. Three in five UAE residents are weighed down by a sheer mountain of varying debts from credit cards to personal loans, home loans and auto loans.

Something that has always added to people’s worries is the fear of defaulting on a debt or bouncing a cheque and facing a jail term. Dubai Courts decided that rather than imprisonment, they would start issuing fines.

In October last year the UAE cabinet announced they would introduce an insolvency law for individuals who were unable to pay off their debts.

Loan consolidation and debt refinancing or restructuring can help make debt — of any kind — more manageable.

Big perk

There’s one big perk to debt consolidation loans that makes them different: These loans often come with a reduced interest rate and a lower monthly payment. Which in theory means you should be able to pay off the loan quicker! Debt consolidation is definitely a way of looking at your debt and taking ownership of your finances to get into a better place.

If you are in severe debt and financial hardship, then you might want to consider restructuring your debts.

You can agree on an amount that you can pay back instead of the full debt, but often this requires an external party to negotiate on your behalf. It will also likely hurt your credit score as you will essentially default on the original loan.

Both debt restructuring and

debt consolidation have the same goals — to lower the interest and pay off the debt as soon as possible. Your finances are your responsibility so you must always be alert.