Debt free
Because of the pandemic situation, banks offer more concessions and defaulters can take advantage of that. Picture for illustrative purposes only. Image Credit: Seyyed Llata | Senior Designer, Gulf News

Dubai: For more than seven years, a former Dubai resident’s credit card debt ballooned to more than Dh1 million. However, after negotiating with the bank and with the help of a finance expert, he succeeded in working out a consolidation package whereby he will now be paying only Dh25,000 to settle his liabilities.

The defaulter is an Indian national who had first arrived in the UAE in 2008. He initially worked as a clerk and through sheer hard work was able to save money and started his own business in 2012. However, following a series of unfortunate events, his company went bankrupt.

He started taking loans and defaulted. He also maxed out his credit card. Debts and other liabilities piled up and police cases were filed against him. Because he was so afraid and didn’t know what to do, he absconded and went back to India.

His credit card was last used in October 2013 and he was not able to pay after that. He maxed out his card that had a high credit limit. After more than seven years of default, credit card interests and surcharges ballooned to over Dh1 million.

Returning to Dubai

Back in India, life remained difficult. He wanted to return to Dubai, but he had been blacklisted in the UAE. That’s when he decided to chalk out a salvage plan. He hired a law firm to contact the bank and negotiate his debts. Barney Almazar, finance expert and director at the corporate-commercial department of Gulf Law, said he was convinced by his sincerity and decided to take up his case.

Almazar told Gulf News: “The former Dubai resident was completely truthful with his circumstances. He wanted to come back to the UAE. So, we assisted him to negotiate and settle his debts.”

Thorough and systematic negotiations followed. “Now, he (defaulter) cannot believe that he will be paying just Dh25,000, which is even less than the credit limit on his card, in order to clear his Dh1 million dues,” Almazar noted.

From Dh1m to Dh25K 1-1613971314718
The settlement letter sent to the Indian who was deep in debt Image Credit: Supplied

Hope for the hopeless

Tips from Almazar to negotiate onerous debts
* Communication with your bank or lending institution is the key. Keep them regularly updated on your financial status. Be honest with your bank or lending institution.
* Even if you do not have the financial capacity at the moment, you can still negotiate with the bank. In fact, you should be very active in demonstrating your genuine intent to honour your obligations.
* Cut back on cost of living. Try and agree with the bank or lending institution on a monthly payment plan that you can afford, provide a list of your income and expenses to support your request for a lower monthly payment. If you do not pay and avoid contact with the bank, the only assumption that can be made is that you are running away.
* Banks are not in the business of sending people to jail. Especially during the pandemic, we have positioned our bargaining strategy not just on legalities, but also on humanitarian grounds, thereby giving those who are in financial difficulty an opportunity to work out a payment plan and thereby seek relief from anxiety, guilt and shame and also avoid the stress of being constantly harassed by creditors.
* We can only help those with good faith and sincere intention to clear their liabilities. From our side, we always make sure that our clients have a strong bargaining power over the debt collectors.

Almazar emphasised: “Hopeless and overly-indebted people can still reclaim their lives. We have been assisting UAE residents of different nationalities with debt problems — from credit cards, car loans, salary-transfer loans, to business loans and housing loans. The numbers have increased during the pandemic.”

He added: “Most of the people who asked for advise have either experienced temporary loss of income or their cases were not overly complicated, but we can only help those with good faith and a clear intention to settle their liabilities,” added Almazar, who was recognised as one of Philippines’ The Outstanding Young Men (TOYM) for law and commended by the Philippines Senate in 2015 for his contribution in promoting the welfare of overseas Filipinos in the Middle East.

“There is hope, especially during the pandemic. I always emphasise that banks and lending institutions are not in the business of sending people to jail. Filing a case against a client is the last option. Borrowers must understand the collection process, their rights and obligations as well as the practical steps in resolving their debts. From our side, we always make sure that our clients have a strong bargaining power over the debt collectors,” Almazar explained.

Previous success story

Back in September 2019, another exclusive story by Gulf News reported on how Almazar and his team helped a Filipina settle a total of Dh2.7 million in surcharges and interests in two credit cards. After two months of negotiations with the banks to settle the amount, she had to pay only Dh26,000 with the help of her mother in the Philippines to clear her liabilities.

‘There is always hope’ is the mantra that Almazar believes. “Never feel helpless and don’t burden yourself with unnecessary stress. Complex problems can be solved one step at a time. We have been closing settlements with banks based on mutual trust and respect. Banks maintain their integrity and defaulters need not lose their dignity,” he added. The key is not to give up and to always show sincerity, he said. “To those who are faced with financial problems, my advise is, just stay focused on your goal to pay it off. Don’t allow yourself to be distracted. If banks know you’re dead serious on paying off your debt, they will honour your intent. We always encourage amicable settlements that are fair to both the bank and the borrower. It is a win-win situation,” Almazar underlined.

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Best time to negotiate

According to Almazar: “The pandemic has made it conducive to negotiate previous debts with banks. Because of the situation, banks offer more concessions and defaulters can take advantage of that.”

In the past eight years, Almazar and his team have indexed the cases they have handled. He noted: “Based on data from almost 60,000 borrowers, the chances of waiving off a substantial amount of debt are high when we can demonstrate that the debtor has been overstaying, unemployed or has absconded and if we can establish that the debtor will have no realistic opportunity to recover from the debt even if he finds employment. Under such circumstances, banks realise that debtor is overly indebted and it will be impractical for them to pursue a legal case.