New UAE Debt Management Rules: How Borrowers Can Get Help
If you’re struggling to manage your loans and instalments in the UAE, there’s help available. The Central Bank of the UAE has introduced new rules requiring licensed financial institutions to provide qualified credit counselling services and consider alternative repayment arrangements for borrowers facing financial difficulties. This means that lenders must now give reasonable consideration to rescheduling or restructuring loans, making it easier for borrowers to get back on track.
The new rules are in accordance with Article 5.2.4.1 of the Consumer Protection Standards, which aims to ensure that borrowers are treated fairly and have a chance to manage their obligations in a sustainable way. Licensed financial institutions must conduct a comprehensive due diligence on the borrower’s overall indebtedness, including both secured and unsecured loans, and verify this information with the Credit Information Agency before offering a new loan or restructuring an existing one.
If you’re struggling with debt, it’s essential to approach your bank early and get any agreement in writing. Most lenders have teams that can adjust terms by reducing instalments, extending repayment, or combining loans into one facility. Even small but regular payments can help show good faith and reduce the risk of stronger measures like travel bans. It’s also crucial to prioritise your debts, with rent or mortgage arrears coming first, followed by gas and electricity, and then other necessities.
Banks usually prefer to resolve debt through agreement rather than long court cases. However, if you’ve already left the UAE, banks may appoint international debt collection agencies to contact you directly, or apply to have a UAE court judgment recognised in another country. This means that unpaid loans don’t always remain confined to the UAE, and borrowers should expect banks to use the channels available to them.
In some cases, lenders may issue a travel ban, which is a court or police order that stops you from leaving the UAE until the case is resolved. This is often used for mortgages and business loans, but can also be triggered by smaller debts if they go to court. If someone has already left the UAE, the court can still issue a warrant, which can lead to detention on re-entry.
To avoid these consequences, it’s essential to seek help early and work with your lender to find a solution. You can approach your bank to request a consolidation of loans or restructuring of loans, and they must consider your request fairly. You can also visit the website of banks such as FAB for more information on debt management.
Here are the steps you can take to get help with your debt:
- Approach your bank early and get any agreement in writing.
- Prioritise your debts, with rent or mortgage arrears coming first.
- Work out a realistic debt management plan, deducting the cost of food and other necessities from your income.
- Consider seeking help from a credit counselling service.
