I plan to liquidate some of my assets at home, but it will take time
Case
Question: I am a resident of Dubai and recently lost my job. I have an outstanding personal loan of 30,000 Dh and credit card charges. I plan to liquidate some of my assets back home, but it will take time. Will I be granted this time for humanitarian reasons? If not, what legal action will I face?
Answer: In accordance with your questions, the provisions of UAE Central Bank Regulation No. 29/2011 relating to regulations concerning loans and banking services offered to individual customers (the “Central Bank Regulation No. 29 of 2011 of the United Arab Emirates”); Notice No. 3692/2012 of the Central Bank of the United Arab Emirates regarding the general conditions and texts of the loan agreements drawn up and approved by the Emirates Bank Association (the “formats of the loan agreements approved by the Central Bank of the Emirates United ” ); Cabinet Resolution No. 33 of 2020 Amending Certain Provisions of Cabinet Resolution No. 57 of 2018 on Regulations to Federal Law No. 11 of 1992 on the Code of Civil Procedure (the “Cabinet Resolution No. 33 of 2020 “); and Cabinet Resolution No. 75 of 2021 Amending Certain Provisions of Cabinet Resolution No. 33 of 2020 on Regulations to Federal Law No. 11 of 1992 on the Code of Civil Procedure (the “Cabinet Resolution No. 75 of 2021′) are applicable.
In the United Arab Emirates, when a personal loan or credit card facility is granted to a borrower, the lender may collect one or more checks as collateral (not compulsory). This is in addition to a signed agreement or application form containing the terms and conditions. This is in accordance with Article 12 of UAE Central Bank Regulation No. 29/2011.
The non-payment of three consecutive installments or six non-consecutive installments by the borrower can be considered as an event of default. This is in accordance with Section 4 (4) of the Personal Loan Agreement Format of the UAE Central Bank Approved Loan Agreement Formats.
Therefore, in the event of default, the lender(s) may elect to deposit your security check(s) for collection. If said security checks are denied due to insufficient funds, the lender(s) may file a payment order against you in accordance with Cabinet Resolution No. 33 of 2020 and Cabinet Resolution No. 75 of 2021. Based on the judgment payment order, the lender(s) can initiate enforcement proceedings against you if you do not appeal within 15 days of the judgment.
The lender(s) can also bring a civil action against you in court to collect the unpaid debt. In the event that judgment is entered against you, the lender(s) may initiate enforcement proceedings against you, which may include the imposition of a travel ban on you. Thereafter, you may not be permitted to travel outside the UAE until you pay the court enforcement amount based on the judgment(s) against you. Additionally, you may not be allowed to travel outside the UAE if you are already in the country while such a travel ban is imposed on you until you pay the amount of the execution.
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You can contact the lender(s) with whom you have personal loan and credit card facilities and explain your situation. You can ask the lender(s) in writing to give you time to pay the dues once you get a new job or liquidate your assets. However, it is up to the lender(s) to grant you additional time to settle the outstanding personal loan and credit card payments, for humanitarian reasons.
Ashish Mehta is the founder and managing partner of Ashish Mehta & Associates. He is qualified to practice law in Dubai, UK and India. All the contact details of his office on: www.amalawyers.com. Readers can email their questions to: [email protected] or send them to Legal View, Khaleej Times, PO Box 11243, Dubai.
