The Debt Panel: I paid back my missed instalments, so why am I being hit with high interest and charges?

▶ Our experts help an office worker who says his repayments are not reflected in his borrowing

Iwork as a document controller in Dubai and borrowed some money in June 2017 to help support my family back home in the Philippines. I earn Dh5,750 a month and missed three payments on my loan earlier this year.

My case was then forwarded to an external collections team, who hounded me for payments every day. They even came to my office and asked me to sign some cheques, otherwise they said they would speak to my HR.

In July, I paid Dh3,000 via the collections company my bank had assigned, something I was instructed to do to regularise my loan payments. In the months after, the bank deducted more sums that came to a total of Dh17,000. I asked the bank to confirm why it had taken this amount and when would I see the repayment reflected, to which it said I was not going to see the adjustment made on my online statement. After numerous calls to the bank and visitations, they still are not able to clarify the adjustment.

I can see after all the deductions that it is not at all adding up. I am still getting hefty interests and charges and being deducted. My credit card statement is not lowering either.

I believe I have made all the necessary repayments and my loan has been regularised, but I don’t understand why Dh17,000 was taken when the Dh3,000 should have been enough. Did the collections department alert them to this payment? I questioned them again and again and the customer service asked me to check with my bank, which I did and the bank told me to call the customer service. After all this, and being told different stories about how they adjusted the payment, I still wasn’t convinced..

My debts are:

Loan: Dh28,000 (I pay Dh1,200 monthly)

Credit card: Dh13,000 (I pay Dh1,500 monthly)

My monthly expenses include: Room rent: Dh1,200, Remittances: Dh500 Groceries: Dh500

I hardly go out and when I do, I stick to a budget. What questions should I be asking the bank to resolve my situation? MN, Dubai

Debt panellist 1: Shaker Zainal, head of retail banking at CBI

The interest and other charges applied by banks on overdue payment cases are based on the contractual agreements signed between customers and banks at the time of loan drawdown. Therefore, the first thing you need to do is to check your loan agreement and familiarise yourself with the terms and conditions of overdue payment charges.

Secondly, you did not mention whether you have verified the authenticity of the external collection agents before making payments to them. You need to ensure they were legally authorised to make collections on behalf of the bank.

The next step is to visit your branch in person and ask bank staff to take you through the relevant calculations in detail. Show them the receipts of the payments you have made to the collection agents. Then request the bank officers provide you with your monthly account statements and walk you through each transaction.

If you have paid less than the minimum amount on your credit card statement in any month, you may have incurred additional charges. You need to ask your bank, how much overdue charges were debited on your loan and credit card accounts, what were the basis of these charges and how much of your payments to the collection agents or the bank were deducted from your outstanding loan amount or credit card balance. These should help you reconcile your payments.

Banks take customer complaints seriously and I am sure your bank will make every effort to clarify your questions. If you are still not satisfied, you can escalate your complaint by discussing your case with a more senior supervisor or the branch manager. Banks also have specialised collection units, which deal with such cases. You may request a meeting with the collection unit representative.

In addition, if you feel your monthly instalment is too high due to your increased expenses, ask the bank to restructure your loan, which will help you reduce your monthly cash outflow by extending the tenor.

Debt panellist 2: Ambareen Musa, founder and chief executive of Souqalmal.com

Debt collection can be a murky business. Collection agents resort to all sorts of scare tactics to intimidate borrowers and get them to cough up as much money as possible. Coming to your workplace and threatening to report you to your HR department is unfortunately one of the more common tactics used by such agencies. But the one big mistake you made was to write the cheques without coming to an agreement for settling your debts.

It’s shocking to hear that you haven’t seen the Dh20,000 you paid, make any sort of a dent in the Dh40,000 worth of debt you owed. The maths just doesn’t add up. The lump sum payments you made to the collections agency should have gone towards settling the outstanding interest, principal and late payment penalties.

Have you applied for a detailed loan statement showing all your repayments from the loan start date? As for your credit card, any payments made towards the outstanding balance should have been reflected in the monthly card statement. It would also be a good idea to apply for your detailed credit report and review it for changes in your outstanding debt.

You could also consider enlisting external help. One option is to approach debt management agencies in the UAE, such as Lotus Loans & Overdues Rescheduling Services You can use its services to come up with a plan of action. These agencies may also be better positioned to speak to your bank. They could also help you in coming up with a repayment strategy. Be aware that these services come at a fee, and there is no guarantee you will get the solution you want.

Another option is legal help. The Philippine Consulate in Dubai and the Philippine Embassy in

Abu Dhabi provide free legal aid and counselling for Filipino expatriates dealing with debt-related issues. The former also runs weekly legal assistance clinics, and you could visit for a consultation armed with all the documents you can find.

Debt panellist 3: Rasheda

Khatun Khan, a wealth and wellness planner and founder of Design Your Life

First, collect all the documents including your statements showing payments, emails, loan agreements and settlement agreements both from the originating bank and the collection agency.

Do this for both your loan and credit card. Next, organise the order of events and then note down the following questions:

What is my current outstanding loan balance?

What are the outstanding payments I have yet to make?

Is the loan still with the collection agency?

What is the current monthly repayment and the end date of the loan?

What interest rate am I being charged every month? How much of my monthly repayment actually goes towards reducing the capital? What other fees are associated with the loan and the credit card?

Call the bank and check which branch has customer service mangers you should go to see. I recommend booking an appointment with a customer service manager . Take your documents and the above questions and explain your confusion.

Taking out loans and credit cards should be done with careful consideration. Saying “yes” to a loan means committing a part of your monthly salary to be spent at the bank. This means saying “no” to spending it on something else. You must ensure adequate income is left to pay for your expenses, including budgeting for unexpected events, savings and creating an emergency fund. Without these you will leave yourself short.

The Debt Panel is a weekly column to help readers tackle their debts more effectively. If you have a question for the panelwrite to pf@ thenational.ae