Frugal Expat

How to Settle Overdue Personal Loans or Credit Card Bills in Abu Dhabi?

My quest for proper information about unpaid personal loans or overdue credit card bills started in late 2007. My best friend, who got pregnant two months after she received her personal loan, struggled to find solutions and options to settle her situation.

Unwed pregnancy is a BIG no, no in this country. I really don’t have the grasp of the legal consequences and applicable laws here for unwed pregnancy but it has been known that it can lead you to jail or deportation. Neither of it is favorable, right?

Anyway, my best friend needed to go back home on or before the 7th month of her pregnancy. If she would fly later than that, she would face a challenge in boarding the plane. There might be possibility for rejection which would lead to deeper trouble. To be safe, she had to fly on or before the 7th month of her pregnancy.

The challenge now was her loan. Because her status was single, she was compelled to resign rather than to face the legal consequence of her unwed pregnancy. Once the employee who has bank loan resigns, the employer will automatically inform the bank about it. Your final settlement will also be automatically deposited to your account.
Fearing this scenario, she would likely go home with nothing in hand, not a penny from her final settlement.

In my hope to bring enlightenment to others who may be undergoing the same situation, I planned to write an article about it. However, before I could pitch this brilliant idea to any publication, I must need some concrete information from the reliable sources.

So, I started interviewing few people who worked in the banks. At the back of my mind, there must be a solution for these issues but what are these options. I needed to dig this information. (Unfortunately, two weeks after I pitched the idea in one of the publications, the same idea was featured, front page in a weekend issue.)

Anyway, earlier this month another two friends of mine were in similar quagmire. My friend X took a personal loan in 2007. When he wanted to settle the balance last year, he could not get in touch with the financing company which was affiliated to a local bank. So friend X approached the bank to help him proceed to settling his loan balance.
Unfortunately, the local bank rejected him and advised that they could not help him because that loan was taken from the financing company.

Then ten months after, my friend X received a call from the legal office harassing him for non-payment and urged for full payment within one week. Failure to comply within the deadline means a legal case will be filed against him. Of course, the small amount escalated because of the other charges. The sad part was the legal office was very, very rude on the phone and the harassment stirred major emotional stress on my friend’s part.

Then he came to know also from the legal office that the financing company was closed already. The same reason he was unable to contact the financing company.

Then days after the problem of friend X was settled, I came to know also the same problem of friend Y. Hers was slightly different. She is dealing with another bank. Due to recession, she lost her job so she started to fail paying regularly her monthly dues. Now she starts receiving harassment calls from the legal office too.

I witnessed it with my friend X. This harassment is really no joke and it really creates havoc in your once peaceful life. It is emotionally distressing and draining.

More so, you cannot afford to travel because of fear that the police may pick you up anytime in the airport and lock you up in jail. You will not know at all if these legal offices are simply bluffing or not so you cannot confirm if indeed the case against you is already filed.

The least thing you want to happen is to be picked up by police in the airport.

So, how can you settle overdue personal loans or unpaid credit card bills? Let’s dissect and tackle each case.

Best Friend’s Case. Because she needed to clear her personal loan before she could travel back home and she didn’t have the money to settle the loan she hardly started to pay, her option was to look for a guarantor.

Then she and the guarantor settled her case in the recovery department of the bank. There were required documents too for the guarantor like salary certificate, checks, among others. It is recommended to contact the concerned bank for complete list of requirements.

My Friend X’s Case. His case too was settled in the recovery department. It was quite tricky because he needed to approach the recovery department office where the loan was taken. In his case, it was Dubai. After consulting his options for settlement, he was given a contact person in Abu Dhabi.

While going back and forth to the local bank, the legal office continued calling and harassing him. When he informed the legal office that he would settle it directly in the bank, the legal office insisted to settle it with them. We honestly felt a hue of skepticism as why the legal office continued to urge for payment and to threat for possibility of imprisonment despite the initial contact was made already with the local bank.

Anyhow, the recovery department offered two options.

First Option – Full Payment. The amount escalated already because of the late payment fees, bounced check charges, and who knows what other charges were incurred.

Then the recovery department offered a discount for the total amount if settled on one-time full payment. The banker told us that he would arrange to waive the bounced check charges.

Second Option – Partial Payment. The 50% of the amount has to be settled in cash. And then the remaining balance can be paid on monthly basis for the duration of six months to one year. However, for this option the bank needs a guarantor, and checks issued from the guarantor.

Friend X settled it in full payment. So the bank waived the charges for the bounced checks. After that, the bank issued a clearance certificate stating that he was cleared from his personal loan.

Friend Y’s Case. After she came to know about the solution offered by the bank for Friend X, she decided to go to the recovery department. She had been going back and forth to her local back previously but to no avail. The situation had been dragged but there was no definite solution being offered.

Well, I wish friend Y will settle her problem soon. Good news is she got a new job recently! Hopefully things for her will be smooth again, away from emotional stress and harassment calls.

Lessons Learned. These situations imply us to be frugal and to be smart on our finances especially nowadays that economic situation is not really good.

More so, it is important to talk to the right person in the bank if you face such kind of predicament. They will give you the right information and sometimes if you are lucky to meet a Good Samaritan, he will guide you through and give you financial advice as on how to settle it best.

But I think the best lesson is not to succumb to any luring instant chunk of cash through personal loans or to cave in for the gratification of your personal wants.

If you are in that quagmire already, it is not yet too late. There is still hope. What matter most is learning the lesson – to be prudent in our finances.