Credit Card Debt Default In UAE- Consequences

Credit Card Debt Default In UAE- Consequences

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A news report from The Economist says Dubai’s population would increase to around 3m by 2020. This is a positive sign which can infer more economic activity in UAE and also creation of new job opportunities/new avenues.

On the grey side, this can also mean more money will exchange hands, more people will take credit cards and many will fall into a debt spiral. Having a credit card for convenience is one thing and splurging unnecessarily is another. You wouldn’t want to fall into the latter.

The free-money-mentality can do more harm than you can imagine and that attitude has put a lot of people in trouble.

Credit card debt default can happen unintentionally because one mismanaged his funds and lived beyond his means and resorted to credit cards. There are defaulters who do it deliberately. They signup for as many credit cards from different banks as possible, utilize them to their respective maximum limits and default.

Whatever be the case, the consequences of defaulting on your credit debt in UAE (in any of the 7 Emirates) can be dire. Again, people try to take the easier route of fleeing from the country. Be warned that the long arms of UAE law can pluck you from any country and punish you.

Possible consequences of credit card debt default in UAE/Dubai/Sharjah:

When the bank issues you a credit card, may it be EmiratesNBD, ADCB or any other bank, you are legally bound and you agree to the terms and conditions on the fine print of you credit card account. That means you will have to repay your credit card balance, interest incurred if any, late payments fees, penalties if you missed any payments, interest on cash advances if you have taken cash advances on your credit card, foreign transaction fee if you have used your credit card abroad and also annual fee if any.

So if you are unable to pay your credit card bill and other accumulated charges on your card, the issuing bank can use your security check against the amount due on your credit card account. Now if the check bounces due to insufficient funds, then you will have to face the music.

Dishonour of a cheque’ is a criminal offence in UAE and is punishable by confinement or fine or both.

According to Article (401) of FEDERAL LAW of UAE Penal Code,

‘Article (401)
Detention or a fine shall be imposed upon anyone who, in bad faith, gives a draft (cheque) without a sufficient and drawable balance or who, after giving a cheque, withdraws all or part of the balance, making the balance insufficient for settlement of the cheque, or if he orders a drawee not to cash a cheque or makes or signs the cheque in a manner that prevents it from being cashed.’

So if your check bounces then you will face both criminal and civil charges. In addition to jail sentence, you might not be able to leave the country until you have repaid the balance due, in full.

Take the easier path: Flee the country- Consequences:

If you think rather than going to jail and again going through hell to repay the money back, why not flee Dubai never to come back?

Well, before taking such a step, think twice because this can have life long repercussions.

First of all, your conscience will never agree with such unscupulous actions of yours. It is straight out unethical and against law. You have to return what is borrowed and there is no need for any law to determine that.

Secondly, crossing borders doesn’t pardon your dues and nullify the amounts that you owe to the banks in UAE. UAE banks can proceed against the wrong doer in a foreign country and the law of the country where the defaulter resides can summon him and hand him over to the aggrieved party. And again Dubai banks could sell the outstanding debt to a overseas debt recovery agency which can take action against the defaulter and recover the money.

So fleeing the country is no solution at all. So the best solution according to me when you find yourself in a situation where you cannot afford to pay back your credit card debt is to approach the issuing back and explain your grievance. Maybe the banks would extend your repayment period or tailor a solution for you to get out of debt. I am just speculating here.

Dubai or any other emirate for that matter are amazing places to make a living. At the same time, this country can lure you into unwanted pleasures and perks. Ensure that you claim these pleasures with cash and not credit cards.

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I work for a Abudhabi Engineering company and have an outstanding bank loan of Dh29,000. I also have credit cards with different banks amounting to Dh30,000. My salary is Dh5000. I need a debt consolidation loan so that I can close my credit cards. But due to Central Bank policy, I cannot get a loan. Most of my money goes toward the credit cards’ minimum payments and I cannot support my family. Would any bank offer me a debt consolidation loan?