‘Is bankruptcy an option if I can’t pay my debt of $136,150?’


I have been a proud resident of the United Arab Emirates for 18 years and own a small business. For the past two years, my business has stalled due to the pandemic and I am no longer able to pay my debts on time.

My main debt comes from four credit cards, which equals 500,000 Dh ($136,147). Each credit card is with a different bank. I owe 200,000 Dh on one card, 150,000 Dh on another, 100,000 Dh on the third and 50,000 Dh on the fourth.

In total, my installments for the four credit cards range from Dh25,000 to Dh30,000 per month.

Until now, I paid them back regularly. However, I missed last month’s repayments and will not be able to pay this month’s installments.

I currently live outside the UAE to save costs and work remotely.

I don’t want to leave the debt as it is. Due to the compound interest that is applied each month, all my payments go in this direction.

The UAE has given me a lot and I don’t want to fail the banks. Is personal insolvency an option or is there something else I can do? UQ, Dubai

Debt 1 panelist: Steve Cronin, founder of DeadSimpleSaving.com

Running a small business is tough, and it’s been incredibly tough over the past two years. What is unclear to me is whether your credit card debts were business expenses or personal expenses that you relied on your business to cover.

Either way, debt puts pressure on a business’s success because small businesses are vulnerable to a downturn. Credit card debt is much worse because the interest rates are very high and the debt is growing rapidly.

It looks like you only paid the minimum amount, but with credit cards you have to pay the balance in full each month.

If your debts were taken care of by your company and it is a limited liability company, you would, in theory, have “limited liability” for the debts resulting from the failure of the company. Personal card debt is much more difficult to eliminate, even when you are in another country.

To claim personal insolvency in the courts of the United Arab Emirates, you must be in the country. With these debts weighing on you, you should not return to the UAE until they are fully repaid or you have restructured them in agreement with the banks.

Dealing with four banks will be tricky as they will have different approaches and levels of responsiveness. Emails can go unanswered, so you should call them. If the first person doesn’t help, try again. Use all your friends or contacts in the UAE to help you reach a decision maker.

You will find it difficult to get a consolidation loan because you are out of the country and self-employed. However, banks may be willing to give you a payment holiday or consider some sort of restructuring.

Be honest with yourself about the revenue-generating potential of your business. Is he recovering or do you need to find a job? Go to the bank with a clear plan of what you can afford and when. Note which banks are most open to negotiation: you may need to focus on paying off the smallest debt, so you only have to deal with three banks.

Not being in the country gives you a bit of wiggle room to negotiate and insist they work it out. Don’t be surprised if they refuse and you are faced with rapidly increasing debt and calls from collection agencies.

Can a family member lend you money to reduce your debt? Are there assets in your business or personal life that you can sell, such as a house? You have to be creative and find capital or income in any way possible to pay off the debt if the banks are not helping you.

Debt Speaker 2: R Sivaram, Executive Vice President and Head of Retail Banking Products at Emirates NBD

It is indeed a very difficult situation to be in, especially after spending almost two decades in the UAE. Unfortunately, your business seems to have been hit pretty hard during the pandemic.

It would be best if you proactively communicate your situation to the various banks.

You can let them know that you are committed to paying your dues and request an additional moratorium period on monthly card payments to give you time to become more financially stable.

Credit card interest rates are very high, so interest charges cause debt to grow very quickly.

Carol Glynn, Founder of Conscious Finance Coaching

If you have a major bank, you might want to talk to them to see if you can consolidate credit card debt into a low-interest personal loan, as well as ask for relaxed payment terms. We have seen many banks supporting restructured payment plans, especially since the pandemic.

Since you have multiple credit card debts with different banks, this negotiation may need to be handled separately with all individual lenders. You might consider working with a licensed debt management agency to help with negotiations if the primary bank is unable to consolidate all of your debts.

An alternative is to consider consolidating your existing savings and liquidating some assets at home to gather the funds needed to repay the banks yourself.

Banks may also be willing to reduce the outstanding loan and waive some fees in favor of a lump sum payment. In all of the above scenarios, it is important to continue to communicate with the banks you intend to pay and ask for appropriate payment terms.

Regarding your question about filing for personal insolvency, it would be best to contact a lawyer familiar with the subject and seek advice. I wish you good luck.

Debt 3 Panelist: Carol Glynn, Founder of Conscious Finance Coaching

Bravo for acting quickly on this situation, because credit card debt is the most expensive debt to hold.

Paying only the minimum payment on each credit card results in interest being charged each month. Credit card interest rates are very high, so interest charges lead to rapid debt growth.

As you fail to repay the minimum monthly payments, you also incur late fines. These fines are added to your outstanding balance and the following month you will also pay interest on the fines. This cumulative effect is how credit card debt increases very quickly.

Can you get a personal loan in your current country and use the funds to pay off all your credit cards? This would be the cheapest solution for you, as it avoids late payment fines and compound interest every month.

You can also contact your banks in the UAE and apply for a consolidation loan. If you have a positive relationship, they may be willing to discuss your situation and come up with a mutually agreeable repayment plan.

A consolidation loan results in lower monthly repayments. Ideally, it will therefore be easier for you to meet your obligations.

Personal insolvency is an option, but it is a last resort. It is important to understand that it does not release you from your debts and that you must repay them according to court orders.

It should also be considered that personal insolvency remains on your file for at least five to 10 years and applies internationally.

This can have a negative impact on your financial life for many years. Finding a way to pay off the debt is always the preferred option.

The Debt Panel is a weekly column to help readers manage their debts more effectively. If you have a question for the panel, write to [email protected]

Updated: April 20, 2022, 5:00 a.m.


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