I am currently unemployed and have debts worth 800,000 Dh ($217,835) which includes a home loan and credit cards.
I worked as a CFO for 12 years, but the company went through a management change, which resulted in the layoff of many employees.
I informed the bank of my current situation and asked them not to freeze my end-of-service benefits. To my disbelief, the bank ignored my request and withheld my final payment.
Despite my situation, I had managed to pay my installments on time.
However, I was also diagnosed with a rare cancer. The treatment is extremely expensive and I have almost exhausted my savings.
This means that I have defaulted on my payment obligations for the past two months. I informed the bank of my condition but there is no response.
How can the bank take my end-of-service benefits despite my requests? Can you advise me on what steps I can take to solve my problem, so that I can focus on recovering from cancer? AR, Dubai
Debt Speaker 1: Sameh Awadallah, Acting Global Head of Retail Banking at Islamic Bank Abu Dhabi
I am sorry to hear of your illness and hope you recover quickly.
It’s good to know that you’ve followed up on paying off your debts and that reflects a good credit history.
Given your current situation, I recommend that you immediately inform your bank of the reasons why you have not repaid your installments for two months and why you will not be able to do so at the moment.
You will eventually default on your current debts if you stop making payments. As a result, you’ll owe more money as penalties, fees, and charges accumulate in your account.
Contact your bank and meet with a representative who can help you explore all available relief options. For example, you can request a partial release of your end-of-service indemnities or postpone the due date of your installments. The bank may also agree to a payment holiday of several months.
Also, check the details of your loan agreement and speak to a bank representative to determine if you have “involuntary job loss” insurance benefits as part of the original agreement. This benefit can help you cover your monthly loan payments for a few months.
It’s always best to sort things out yourself, but if you can’t negotiate with the banks, you can ask for help by signing up with the services of a debt management company, who will negotiate with the bank on your behalf to revise terms and make refunds more manageable for you.
They can also help you get debt advice and advise you on how to settle your debts faster. Whatever your decision, please keep your bank informed and informed of your situation.
Debt 2 Panelist: Jaya Ratnani, Managing Partner at Freed Financial Services
We understand your situation and understand how difficult this must be for you and your family.
Countless people in the UAE are burdened with heavy debts and many often fail to read the fine print of the contract when applying for a loan.
Whenever you leave a job in the UAE, the bank receives a notification that this is your last salary/free.
Banks have the right to freeze end-of-service benefits for mortgage customers if they doubt their ability to repay and the loan-to-value ratio exceeds the threshold.
The challenge will only get worse if you plan to move or if you don’t have a new job offer.
First, you must ask the bank not to take your loan from the blocked funds and inform them that you are in the process of finding a job. Banks offer 30-60 days to submit your new employment documents.
It is important that you stay in contact with your bank to maintain trust and keep them informed of your situation.
Given your experience as a CFO, there may be an opportunity to find a job very soon.
Once you have a new employment letter and stamped visa, you can ask the bank to release your tip.
If your new salary is lower than the previous one, you can ask the bank to reduce the monthly payments to help you manage your cash flow.
The valuation of the restructuring will be based on the total household income, including rental income from the property and, if you are married, your spouse’s income. Make sure you have all the evidence available when discussing this with the bank.
Banks can reduce the loan interest rate, increase the loan term, grant a payment holiday, or reschedule interest and principal payments.
If you are unable to work due to your medical condition, you might consider selling the property to cover outstanding debts with the bank.
If the outstanding loan is greater than the value of the property, you can negotiate a debt settlement with the bank.
If the lender agrees, you can pay less than is due and settle the loan in full.
Several factors are considered when negotiating a debt settlement with a lender. These include your financial situation, your cash flow, your rental yield, the market value of the property and your repayment history.
If you are unsure of the best option, you can hire a consultant and give them power of attorney, which will allow them to discuss the best possible solutions with the lender on your behalf.
Regarding your credit card debt, if you have a credit shield, the insurance company may cover minimum payments until you find a new job or settle the full outstanding balance.
You will need to check with the bank or read the terms of the contract before applying for this facility.
Debt 3 Panelist: Alison Soltani, Founder of Leap savvy savers
I am saddened to learn of your situation and wish you a speedy recovery.
As for your end-of-service payment, banks typically use it against debt as a precautionary measure in case the customer cannot continue to pay installments.
Check your credit card and loan agreement carefully to verify the terms of the agreement you signed. If the final salary or change of visa or employment status is detailed in the agreements, he has the right to do so.
However, if you wish to pursue the matter, you can file a formal complaint with your bank. If they do not respond within 30 days or if you are not satisfied with their decision, then you can file a complaint with the UAE Central Bank through their website or by calling 800 22823.
There are a few options to keep in mind when it comes to paying off your debts and covering your basic living expenses while you continue your medical treatment.
The first thing to consider is whether you can earn income to cover your expenses. After three to six months of defaulting on the debt, the bank could file a criminal complaint against you.
It is understandable that you cannot work full time. But could you consider working as a freelancer or taking on a consulting role to advise companies on their finances? This will obviously depend on your treatment and your state of health.
If you have a life insurance policy, check to see if you also have critical illness insurance.
This would be extremely helpful in your case as it would pay to cover the cost of your treatment and possibly your living expenses while you are unable to work.
I also advise you to ask your health insurance company if you benefit from all the advantages and the assistance that it offers.
You can ask your bank for a payment holiday for your credit card and your loan in order to facilitate the situation in the immediate future.
In addition, there are institutions in the United Arab Emirates that you can apply for financial assistance, such as the Beit Al Khair company. There is a form on his website to apply for financial assistance.
Finally, if you’re having trouble paying your credit card and loan and getting the treatment you need, it may be worth looking into selling your home or renting it out and living somewhere else for less. .
If you sold the property, you could use the profits to pay off your debt and return to your home country, especially if you can get cheaper healthcare there.
I hope you can find the right financial solution, allowing you to focus on your health and recovery.
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 13, 2022, 5:00 a.m.