If you are unable to or lax with the repayment of your credit card or other loans, then it could really be bothersome in the long run and if you are in the UAE, then you would have a really tough time.
When a person applies for a credit card in the UAE, the issuing banks take blank cheques as an assurance for repayment of their loans. The problem starts when you default on your repayment obligations.
The first brush up you would have is with the debtor collection agencies or directly the creditors. They will start calling you first and then start hounding your residence and your office to collect the overdue payments. The will try to persuade you either in a polite or a rough manner — the degree depending on how you tackle them.
Deposit of your Blank Cheques
If even after constant persuasion, you do not regularize your loan account or credit card debt, then the bank will deposit your cheques for clearing, which they had obtained earlier from you, Once the cheques get bounced, the police authorities comes into the picture.
Police Case Against You
Once your cheque is bounced, then a police case is filed against you. Earlier cheque bounce used to be a criminal offense in the UAE, but recent changes in the law have made cheque bouncing a civil offense. So you can heave a sigh of relief that under the new laws, you would not be arrested.
But the police will keep an eye on you lest you try to flee the country.
Credit Score Goes for a Toss
The other consequence of not paying your credit card or other loan debt besides facing the debt-collectors and the police authorities is that your credit score gets damaged. This means that in the future, many financial institutions won’t lend you money. Also. you will be debarred from applying for any credit facilities from the banks.
In the last few years, there are many expatriates who have fled Dubai or UAE because they were unable to repay their debt. But they are still debtors in the eyes of the banks and the UAE government. However, certain provisions have been made for defaulting borrowers to re-enter the country in an easy manner, so long as they repay their existing debt with the banks.
How To Re-Enter UAE or Dubai if you are a Loan Defaulter?
Here are the steps you need to go through in order for a defaulting borrower to enter UAE or Dubai once more:-
- Appoint a Representative
When you are outside the country, you need a person to represent yourself in UAE. This can be any person you trust and can present power of attorney to on your behalf, to deal with the financial institutions or banks. Many banks will accept a simple letter of authorization.
- Negotiate a Settlement with the Bank
Once you are done with the appointment of a representative, the next step is to negotiate an amount of settlement with the bank. Many times, banks are willing to offer up to 50% of waivers on your credit card or other loan outstanding if they find that you really serious about repayment. Secure the best repayment terms at an acceptable amount.
The reason you don’t want to hire anyone but a lawyer is that you want a good negotiator to negotiate for you. Even though a non-lawyer would do, but won’t be that competent to read between the fine lines.
- Have Everything Written
Once you have negotiated the settlement, the next part is to put everything down in writing on the bank’s letterhead and stamp. The reason this is important is that many times, bank officers and employees often get transferred and the new officer in charge may demand the clearance of the entire amount outstanding and not the settled amount.
Hence, it is important to have everything in black and white so that you have concrete evidence in case the banks demand some extra sum.
- Ask for a No Dues Certificate and other clearance certificates
Once you have settled the account with your creditor, ask for a no dues certificate confirming that you have repaid the entire loan. Also, ask for a certificate to be submitted to the police authorities confirming that you have paid the loan for removal of the police case against you.
Many times, the banks also directly intimate the police about the closure of the loan account. This generally takes about 2 weeks.
- Get a Police Clearance Certificate
After the bank clearance certificate, obtain a clearance certificate from the police authorities, to clear any case pending against you. The police will cancel the case against you. However, insist on having a written document confirming the same from the police authorities.
Often times, you would have to start the procedure of obtaining a police clearance certificate by contacting your embassy and follow the set guidelines for the same.
- Free to Re-enter UAE
With all the loan outstanding and credit card dues repaid, and all the clearances obtained, you journey back to the country will be smooth and enjoyable. You would no longer worry about collection agents, or banks or the police authorities troubling you.