Al Awadi Mohammed Al Awadi, legal consultant of the Abu Dhabi Police, told Khaleej Times: “In such cases, the judge will examine each case individually and defer payment of financial obligations until the defaulter surpasses the financial crisis or joins another employer.”

However, he said, the court will not issue a verdict writing off these debts.

The defaulter can depart the country if the lending bank does not demand the court for a ‘Travel Ban’, he said adding, “Should the person flee the country, court procedures will go on until a final verdict is reached.

“In such circumstances, the UAE can enforce the verdict if it has an extradition or ‘judicial mutual cooperation’ agreement with the country of the defaulter.”

With the expats making up nearly 90 per cent of the private sector workforce, the banks are concerned about a rise in defaults.

The total value of personal loans, issued by UAE banks, stood at Dh54 billion in the first half of this year.

Banks had provided clients for automobiles, housing, education and against credit cards.

Travel Ban

Banks have a potent weapon, which allows them to get a ‘Travel Ban’ imposed on individuals who want to slip out of the country without clearing their financial obligations.

“We are not worried about the situation emerging from the negative fallout of the economic downturn, with hundreds of employees being laid off by companies in distress in Dubai,” said a senior banker, while speaking on the condition of anonymity.

Loans were generally issued without collateral or guarantees.

The banks, however, obtained the necessary securities like letters from the employers and advance cheques. Car loans were granted to people who had credit worthiness and a clean record.

If fired from the job, the person cannot get the visa cancelled until he/she gets a clearance from the bank, which would put a ‘Travel Ban’ in case of a default.

Amro Abel Hadi, an expat, who was terminated from his job a few days back was working with an international contracting company in Dubai.

“I have worked here for three years. I never expected the situation would be like this,” he said.

“Last year, I took about Dh150,000 to buy a small flat in my home country and everything was ok. However, now after the termination I don’t know what I have to do because I have just a month to leave the country and most of the contracting companies have decided to reduce the number of employees including engineers,” he added.

Haythem Ahmed, who is now jobless, had resigned from a local bank in the capital to join a leading property company. However, he was shocked to know that he was terminated on the first day of his new job along with a number of others.

Haythem is living with his wife and a new-born baby in a small studio flat. “For me, it is not a big problem because I have to repay only Dh44,000 for a car loan,” he said.

Haythem hoped that if the bank agreed to increase the defaulting period from three to six months, it would give him a chance to find another job.

“In case I cannot find a job, I will send my wife and my baby back home and I will stay here to face the consequences. Maybe, I will end up in prison if I fail to repay the car loan,” he said.

news@khaleejtimes.com

 

Reader's comments:

 

I think it is a great help for people how sincerely want to stay in UAE as most of the people be sacked will be effect by loan factor only. I believe some more information about the procedure how to go with the facility of applying with the Court of law & approximately how much it can cost the person can help a lot to plan & step into the right procedure. -Atif Masroor , Dubai

Government should interfere with this matter and give adequate time to repay the loans, for those who loss their job. -Manoj, Dubai

I heard a news that if any bank is declared as Bankrupt, then it’s obligation to pay its customer is either nil or very negligible amount. But if any of its customer lost his job due to the effect of this global financial crunch, then why can’t banks treat him in the same manner? I also came to know that, Bank will give a time period to re-pay the instalments. Is same rule is applicable to banks also, are they refund depositor’s money after some period? - Alagappan, Dubai

Banks are taking some money as insurance charges. My question is why can't bank claim with the insurance company if a person termed himself as a bankruptcy. - Mahesh Iyer, Dubai