“I don’t have a job and I can’t repay my loan of $217,835”

I took out a personal loan of Dh800,000 ($217,835) in 2018, but lost my job the same month it was approved. I was tracking the payments, but started falling behind at the end of the first year because I couldn’t find another job.

There is huge interest accumulating on the principal amount and I am aware that the situation will only get worse if I am unable to pay the monthly installments.

I haven’t gotten a full-time job so far, but I’ve worked as a freelancer in IT. However, the money I get from this is minimal and it is difficult for me to manage my daily expenses.

To add to my concerns, the bank took legal action against me, along with a travel ban. My situation worsened and a court in Dubai ordered me to pay 600,000 Dh.

I have no funds to repay this large sum of money. My family and my friends are ready to support me financially but it is impossible for me to borrow 600,000 Dh.

The stress is unbearable and affects my health. Can you advise me on how I can negotiate with the bank and come to a mutual agreement for the settlement? JD, Dubai

Debt Speaker 1: Sameh Awadallah, Acting Global Head of Retail Banking at Islamic Bank Abu Dhabi

I can understand how stressful your situation must be, but it’s good to know that you’re surrounded by friends and family who are willing to help.

The most important step for you to take is to respond to the court before the payment deadline. This may mean writing down your response and appearing in court whether or not you think you can repay.

By responding to the lawsuit, yourself or through legal counsel, you can ensure that the collector must prove that you owe the debt, that the amount is correct, and that the debt collector has the legal right to charge you to collect it.

You may even be able to resolve the debt by responding or going to court, as some banks prefer to settle rather than go through protracted litigation.

Responding to a debt collector’s lawsuit in court will likely put you in a better position, cost you less in fees, and give you more control over how you pay off the debt.

Another important step is to seek advice from a legal representative, who will help you understand your options. Your legal advisor will communicate on your behalf with the creditor and advise you on the best possible solution to settle the debt.

Given your situation, I suggest you manage your day-to-day expenses by trying to get an additional source of income that will help you raise money faster.

Be aware of your expenses and try to build a safety net that will help you in times of financial crisis.

You can try other ways to earn extra income through a hobby or by expanding your freelance IT network to find more work.

Tackling debt can seem overwhelming, however, stay focused on the bottom line and learn to be more mindful of unnecessary spending. Eventually, you will take control of your situation and be free from your debts.

Debt 2 Panelist: Jaya Ratnani, Managing Partner at Freed Financial Services

We understand that this must be an extremely difficult time for you and your family. In no time, an unpaid debt can turn into a monstrous sum as interest and penalties are added to the loan. However, there are options to help get through these difficult times.

First, it is important that you continue to make payments even if it is a reduced sum to show your intention to pay the debt.

Always stay in touch with bank collection staff and do not avoid their calls. Continue to seek solutions, such as restructuring or settlement, based on your personal and financial circumstances.

Although you continued to make payments for the first year after your dismissal, you may have stopped making payments altogether thereafter, leading to the bank exercising its legal right to recover the full amount owed. by filing a civil suit and a travel ban against you.

Under the loan agreement, the bank is in a strong position to prevail in the event of non-payment, and in the majority of cases, court verdicts are usually in favor of the banks. At this stage, the chances of negotiating and finding solutions with the bank become lower because it has also incurred costs in time and money to collect its debts.

However, it is not too late and you can apply to the bank for an amicable settlement.

Although you cannot travel, many companies employ teleworkers, especially since the Covid-19 pandemic.

Alison Soltani, Founder of Leap Savvy Savers

A settlement plan allows you to pay less than what you owe the bank. This is possible if both parties mutually agree on the reduced amount.

You should try to convince the bank of your willingness to repay the loan. The bank considers several factors when reviewing a settlement proposal, such as your personal and financial situation, your cash flow situation, and your repayment history.

Prepare a cover letter that explains the events that led to your current situation and let the bank know that you may be able to settle the loan by borrowing funds from family and friends.

Gather all important documents related to your situation, such as a termination letter, bank statements, cash flow statement, and other assets and borrowings to support your claim for forgiveness against the total amount owed on the loan.

Alternatively, you can also seek help from a professional debt management company, who can negotiate the best settlement plan on your behalf.

Debt 3 Panelist: Alison Soltani, Founder of Leap savvy savers

I’m sorry to hear that your job loss coincided with the repayment of a large loan.

In terms of repayment, I would approach the bank’s relationship manager first and try to negotiate new terms, such as lowering the interest rate or extending the loan repayment term.

Explain your situation and provide evidence of your job search attempts.

As stress affects your health, it may be worth liquidating any assets, including property or land you may have in the UAE or abroad, to pay off the debt. Although this is not an ideal situation, the immediate priority should be to repay the loan.

You can also seek legal advice regarding the application for personal insolvency in court.

Insolvency law was introduced in the United Arab Emirates in 2020 to support people facing unforeseen financial difficulties and unable to pay their debts.

As far as I know, the court appoints experts and a trustee to manage the financial affairs of the debtor during the legal proceedings and throughout the agreed repayment period.

Certain restrictions may be imposed on debtors, such as the inability to request more credit or to carry out major financial transactions without approval; however, these would be fully explained and agreed upon in court.

Regarding your job search, I would start thinking outside the box. Technology skills are generally in high demand internationally. If your job search in the UAE has not been successful, perhaps broaden your search to include global companies.

Although you cannot travel, many companies employ teleworkers, especially since the Covid-19 pandemic.

You may find that some businesses require remote IT support or website creation and design. I would also advise you to consider your transferable skills and apply them to different industries and positions.

When it comes to managing your day-to-day expenses, it would be advisable to create a budget.

First, track your expenses and label them as needs and wants. You can start by narrowing down the categories you deem to be wants, then analyze your needs and explore ways to minimize costs in those areas.

For example, you might consider downsizing your accommodation, cooking in batches, or living close to your job and amenities to reduce transportation costs.

I wish you luck repaying the loan and finding work.

The Debt Panel is a weekly column to help readers manage their debts more effectively. If you have a question for the panel, write to [email protected]

Updated: April 27, 2022, 5:00 a.m.

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