UAE credit card dues: Fines, travel bans; all you need to know

Question: I was a UAE resident for 12 years and returned to India in June 2020 after I lost my job. I had two credit cards, with an outstanding amount of Dh22,000. I could not settle the amount before I flew back in a repatriation flight from Dubai due to my financial situation. A representative from one of the banks called me, asking me to pay the amount. He claims that he is a private debt collector appointed by the bank. What can I do to protect myself legally? I am willing to pay the amount in instalments.

Answer: Pursuant to your query, it is assumed that you were a resident of Dubai and had availed credit card facilities from banks which are based in the emirate (the ‘Bank’). It is also assumed that the Bank had collected security cheque(s) from you against the limit of the credit cards facilities.

It should be noted that in the UAE, when a personal loan or a credit card facility is granted to a borrower, banks or financial institutions may obtain from the borrower, a signed personal loan agreement or a signed application form which contains terms and conditions. They may also collect cheque(s) as security against the loan amount or credit card limit amount.

Failing to pay three consecutive instalments or six non-consecutive ones may be considered as an event of default.

This is in accordance with Article 4(4) of the Personal Loan Agreement format appended to Notice No. (3692/2012) of the Central Bank of the UAE, which states: “The loan elapses and all the instalments, interests and any other fees and expenses become due and payable immediately without having to give any notification or any court ruling and without prejudice to any other rights of the bank according to this agreement or in accordance with the law - in the event that the borrower failed to pay three consecutive instalments or six non-consecutive instalments of the monthly instalments without approval of the bank.”

Therefore, in case of a default, the Bank may choose to deposit your security cheque(s) for collection. Should the said security cheques be dishonoured due to insufficiency of funds in your bank account, the Bank may file a criminal complaint against you. Dishonour of a cheque in the UAE is considered a criminal offence pursuant to Article 401 of Federal Law No. (3) of 1987 on issuance of Penal Code of UAE (the Penal Law of UAE).

Upon the filing of a criminal complaint, a travel ban may be imposed against you and you may be detained when you re-enter the UAE.

However, if the amount of your security cheque is less than Dh200,000, the punishment may be a penalty, which may vary between Dh2,000 and Dh10,000, depending on the cheque amount.

Ashish Mehta is the founder and Managing Partner of Ashish Mehta & Associates. He is qualified to practise law in Dubai, the United Kingdom and India. Full details of his firm on: www.amalawyers.com. Readers may e-mail their questions to: news@khaleejtimes.com or send them to Legal View, Khaleej Times, PO Box 11243, Dubai.