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Beware bad debt in Dubai

Chances are, if you’re a young banker lured to Dubai a couple of years ago by the promise of big bonuses and a tax free salary, you wouldn’t have been too prudent with your finances. However, now that the employment market is a little more shaky, it’s worth bearing in mind the emirate’s strict policy over debt repayment before splashing out on that new Hummer.

Dubai’s banks were previously fairly liberal when it came to giving out loans, often letting proper credit checks go for things like car loans.

This seems at odds with the fact that, under Sharia law, if you default on your debt you face a prison sentence. Even a bounced cheque could result in jail until you’re able to pay the amount back again.

The Times recently reported that an increasing number of expats (around 3,000 supposedly), faced with a change of fortunes, had skipped out of the country in order to avoid defaulting on their debts, leaving their cars at the airport.

The Independent goes one step further in attempting to paint a picture of the horrors of getting into debt in Dubai. It talks of expats sleeping in sand dunes (unlikely, admittedly) or living out of their car in the airport.

Obviously it’s not illegal to be in debt, but if you default on it in any way you face a jail sentence. The slight upside is that once you’re able to repay the debt, the slate is wiped clean and your credit record is left unblemished.

Karen Andrews, an expat interviewed by the newspaper, said she didn’t know about the strict laws before it was too late. At this point, her husband Daniel was terminally ill and had racked up a mountain of debt:

“When we realised that, I sat Daniel down and told him: listen, we need to get out of here. He knew he was guaranteed a pay-off when he resigned, so we said – right, let’s take the pay-off, clear the debt, and go.” So Daniel resigned – but he was given a lower pay-off than his contract suggested. The debt remained. As soon as you quit your job in Dubai, your employer has to inform your bank. If you have any outstanding debts that aren’t covered by your savings, then all your accounts are frozen, and you are forbidden to leave the country.

Calum McClure, managing partner for Decol Debt Collections in Dubai, says: “When you think about the amount of credit cards, personal loans, mortgages and auto loans out there, what we’re seeing now is just the tip of the iceberg. When you get house prices dropping by up to 50%, who is going to cover that?”

How can you avoid the worst? Talk to your bank before it gets too dire, says McClure: “Ultimately they would like their money back, so I suggest you talk about rescheduling your payment plan.”

Comments (38)

  1. all i can say that to put some one in jail because he un able to pay for conditions above human ability is too harsh and there must be commen ground where the both party can reach a better solution than putting some one in jail.

  2. Questions:

    1- How would my bank know for example with which bank I have credit cards?
    2- How about the Credit Shield thing, is it tru that it cover in case I lose my job.
    3. Is it true that they can put you in jail, if you cannot pay, for example your credit card? What if you are outside the UAE, already?


  3. I used to be working as a debt collector within the UAE, its is not a simple procedure to put someone in jail just becasue he didnt pay one of his installments. when we apply to file a police case, ususally, the police themeselves used to call the debtor before even filing the case to ask him to contact his bank and try to find some solution ( re-schedule the loan etc..). but again, the bank will never file a police case unless they have lost all reasonable approach with the debtor, thats why they have a Collection dept.
    One major and very important thing that many expats dont know about, is that, the minute he or she resigns, or even if they were asked to quit ( such as the situation we are facing now), The Human resource dept in their Company is obliged by law to inform the bank in writing that This employee is no longer working for them, so , immediately the bank will end up freezinng his account, even his end of service . in this case, HE or She , can not use their money, they are paralyzed, unless they have a different account with a different bank with no debt . ususally this letter is issued against a personal loan or a mortgage.

  4. it’s not the person’s fault if they losses their job, they dont want to run from their debt but what to do if someone losses their job? its the employers fault

  5. with credit comes risk, its the banks here that need to take the brunt, the reasons for non repayment in most cases is out of control of the individual,

  6. Again, aren’t we all paying for all this defaults on the very high interest rates they charge on credit cards? and how about those also high Credit Shield thing, aren’t those supposed to be convering these defaults. Putting people in jail for not being able to pay if they lose their jobs? What an archaic and unfortunate thing. I hope this is not really the case in actuality.

  7. if i am indivisual credit card and personal laon user and totally fail to pay my debt and run away from uae what will happen ??? will they catch me from out side uae ?? and how long will be sentance jail if they catch me and send me in jail if i not able to pay any money ???? PLEASE TELL ME. THANKS

  8. It’s unfortunate that this sort of tight control is not in place in other countries, perhaps people will now think twice about living so far above their true income. It’s everywhere in Dubai, people with rather ordinary jobs driving around in high end cars, paying high rents for fancy apartments and spending like there’s no tomorrow. This sort of bad debt practice will maybe make people realise they need to live within their means, rather than being pre-occupied with just trying to impress friends and acquaintances.

    If this financial crisis makes people realise their debts have to be honoured, then it will not have been a complete waste. It’s time the “flash Harrys” realise when times get hard they cannot just cut and run and expect others to pick up the bill for their lack of financial restraint. The days of “My word is my bond” seem long gone, more’s the pity.

    I get fed up of hearing “its not my fault”. All I can say, is wakeup & take responsibility for your lack of foresight and disregard for your personal finances. So much for the “blink” society, renegading on your debts will soon make your friends realise you were living nothing more than a big lie!!

    The Grim Reaper Reply
  9. authorities here in dubai does not accept reasons. They will just catch you and put you in prison if someone file a case against you. No one should be put in jail because of non payments due to recession because it is definetely not one’s fault he does not have money anymore. Collection officers harrass and threat their clients and asked them to borrow money from friends or sell their belongings just to pay. bad thing… very bad thing

  10. Hi,Im a Filipino.I used to work in Dubai for 7 straight years,I got a total debt of 89K from 5 credit cards & 2 loans-and for years I am a good payer, but I have defaulted for 6 straight months in all of my obligations due to family matters that I cant avoid. I’ve absconded the country 3 months ago bcoz the bank collectors are threatening me by imprisonment. Honestly speaking-i dont have any intentions of running away bcoz I have a stable job and dubai became my home away from home.Im happy with the warm climate here bcz all my friends are here.I LOVE IT HERE OK! but those threats really scared me so I run away. Now, I dont have any work in my country and plans to go back to UAE bcoz my visa is still valid..My question is,Will the banks accept my proposal to pay my debt in longer terms but fixed installments?? And assuming I didnt get arrested in the airport upon entry,how many months or days do I have before the banks learned that I came back and have me arrested??Hope all of you can advise me..Im not a bad person, I just got scared of imprisonment bcoz im no criminal. (17)

  11. I defaulted a total of 150k dirhams from loan and credit cards in Abu Dhabi last December ’08 and I have a job offer now in Doha, Qatar. What are the chances that I may be caught upon arrival in Doha Airport? Is there any extradition between GCC countries? thanks

  12. I have credit cards that havent pay for 5 months. Because I have a problem in Philippines and also I have a debt from other people so I stop paying my cards but its not intentionally. I will pay it after my other problems. Everyday I received a call and threatening me but I ignore it. I ‘m not going anywhere. All I need is a little more time to start paying again. IS it possible that they will bring me to jail? Please I need some advice. I cant sleep properply thinking about this. My family will be suffer if I will be in jail.

  13. Dubai says it’s islamic in following laws and putting people behind bars who cannot pay debt. But at the same time, they allow the increase in debt in many folds due to interest which is again haram in Islam. The UAE law makers must revise their policy so that it will be beneficial to all, no expat will then run away.

  14. The UAE law makers must revise their policy so that it will be beneficial to all, no expat will then run away, with current rules, it’s not a win-win situation.

  15. It will be forever haunt you..

  16. I believe Dubai is now become the worst nightmare for every one the way the banks approaching people .Any one will be scared .The mistake and full responsiblity goes to UAE govt.that they made Dubai i n a way that people have to borrow money .Before Dubai was great people came here and earned good money without any debts ,living cost are reasonable everyone was happy.But after 2000 Dubai changed entering in a new era same like western countries that u have must hold credit card to borrow thingsNow everyone in Dubai is in problem and suicide ,Dubai media is not allowing to explore these bad debits news .I must say one things that Dubai govt must do some relief or some relax .

  17. The comments was all right, just missed one payment at the bank and the collection officer will tell all insulting words with you, harrased you like a criminal, i experienced the same,due to some problems arise in our country my priority is my family first, i am on stabe job, but failed to pay 2 payments because of the current situation in our country. But banks will shout with you like you are a f…… criminal. they will say all the bad words and tell that you will be lock in jail. I dont have an intention of running away because its hard to find a job way back in our country but as the banks approching me, i might be terminated of job,because they are even calling my employer which my boss doesnt want. i tried to talk to them for some ressetlement but again, they will ask you to come back again and again and they are telling its bank bussiness and that they are not offering that scheme. Talking about one bank (RBS).

  18. these debt collecetors really sucks! they are hearthless when they are calling the people and harassing them with bad words… i know hundreds of same stories.. and i experience hundrerds as well.. I just cannot get the point of putting a debtor in jail if he/she failed to pay… if they u are in jail, the more you cannot find a way to pay ur debt right? its just this: when they imprisoned you: 1. less chance for you to pay ur debt. 2. costly for the government to keep thousands of debtors in jail… 3. no chance for the bank to recover their money… f

  19. yes that is true,once the person is in jail,the ability to pay is already gone,the person will be more than happy to stay in jail rather than getting harassed by the collectors everyday,at any rate,dubai jail is not that bad, they even serve you biryani,no need to worry about repaying what you owe,the extorbitant rents,waking up early in the morning to attend to work,just consider it as a grand vacatiion,lets say, you’re in carribean for about 22 days,not bad,the expenses will be shouldered by the govt,not the banks

  20. hi..i ve got a question..i live in uae and i planning to resign in a few months and leave the country, but i have some debts..i m willing to pay f course, but can not pay everything before i leave…should i go to the bank and talk to them ?? i m jus afraid to resign, and then my employer will the bank now, and i will be stopped at immigration when i will leave ??? or should i leave the country asap and pay back from wherevr i will e..thanks for your answers..please help

  21. Regarding that person who posted his question on 18th April 2009
    keep in mind that Banks are working together in one system which called I-score !!
    Through that system they can inform and update each others moment by moment what is going on with the same customer requesting for a credit or even a debt card just like networks in France. They are competitors but if customer didn’t pay his bills in one of them, then tried to get a prepaid line in other they would request him to settle his bills in the previous one.
    Some of the discipline there they have … !!

    Nathan Wallace Reply
  22. my Philippine friend, its best that you don’t enter Dubai till you have had a word with your debtors….. Dubai govt already must have had a case filed on you at the airport, you will get arrested. so call the banks you owe and try to negotiate your debt. if yes they might help you out because they need the money back.

  23. hi. please help me. i’m just scared and confused because of some horrible news i heard about expats being held in the airport while leaving dubai because of unpaid debts. i’ve got loans and credit card payables here in dubai. fortunately, i still have a stable job and have been a good payor to my creditors. I admit there was once or twice that I was not able to pay the full amount due in a month’s credit card payable. but there was NEVER a time that I did not make a payment . Now, I no longer have current card due and loan payables bt still have monthly installments to pay in the next 12 months. A few weeks from now, I will be going on a one-month leave for my annual vacation to my home country and will be back here after that period. i am not planning to default in any way. What I am scared of is I have mentioned this (travelling to home country) to the bank representative once during a credit-card-related inquiry I have made via phone. QUESTION: Is the BANK’s KNOWLEDGE of my leaving dubai for a vacation REASON ENOUGH for them to IMPOSE A TRAVEL BAN on me? WIll I face any problems on the airport? PLEASE PLEASE PLEASE HELP. NEED YOUR ADVICE AND CLARIFICATION. thanks.

  24. hi. i have personal loan and credit card left unpaid in saudi arabia but because of finacial problems and have no time to inquire how to pay my debts while here in canada i wasnt able to pay it for 2 years already. but i am going to settle everything after my coming vacation. my question are?
    will i be arrested in the airport if im going home in the philippines? will i be arrested or refuse to come back here in canada or if ever i will go to hongkong or other country?
    pls help me.

  25. I have this delay payment to the bank for both my credit card and loan i want to know if 4 mos. i don’t pay to the bank they will to file me a police case bur still i am here working in UAE and every time they call i am also answering to them and tell just wait if i recieved my salary coz at now we are in recession my company is affected and i am a survivor and really i don’t want to run away in this credit as long as i am here and can manage i will to pay

  26. im currently working in collections ….any person who has bounced check (for credit cards/loans or personal)of any amount wil be sent to jail under artical 401 uae federal penal code.

  27. a question to abbas. my brother is in jail at the moment due to his debts they said they will release him after 45 days and his debts will all be paid off. is this true?

  28. Please note that if any one in debt , if banks not filed a case and traveld ban no one will stop you at airport . you walkout from this country any time before fileing case.

  29. I have a debt with one of the bank in UAE and left the country with out re paying my debt around 200 thousand after few months back in India the debt collection agencies found me and warned me that they will inform interpoll and with the help of central bewurow of investigationt they can arrest me in India and my passport will be black listed all over the world, after reacheing India i paid AED 25000/- but now my situation is verst even after after the job loss i am finding difficulty for my day to day living and noboday is willing to giving me any kind of financial support, Is there some one who can give me a advice in this regard? I am totally confused that whether i will stay in India and face the consequences or i will go back to UAE and spend my time in Jail.If i will stay back in india what all concequences i have to face.Kindly advice?

  30. I need your advice my husband lost his job and because of the ban he decided to go back home I used to cover his loan however we decide to stop otherwise i will get drowned and i have loans and credit cards to pay too and since i was left alone with our son i need to fight! Dunia called and i told them that my husband is coming back. now I found one gentleman enjoying my door bell and stayed there like 15 minutes.. 1st we do not open our door to starngers and 2nd i got scared that i have a feeling that it could be a collector! are they physically going house to house and harass the wife of the debtors?? please advice…im scared that why i dont miss paying my debts though my husband is helpless this time!

  31. Its better not to go back to dubai, i hv friend with the same case wherein the arrested him at the airport upon entry and put directly to the jail until now..
    Dont put urself to the hole…

  32. Is it possible for FGB to deposit your security check if you are paying monthly and the only problem is I have short payment??

  33. Dear Friends, I am in the same situations like you all, I believe after all the efforts we exert and all the hardship we are inputting along with our daily lives, we all apparently need to increase our Faith and Trust with our God. We all need to seek his help and then we do the actions we required to solve all our earthly problems.

    After all, we are all still blessed for we can breath, we have food to intake, we can see, can walk, can dance for instance…Still we have the reasons to be thankful as God will never leave us during this dark moments in our lives.

    Just increase more our Faith in Him and soon soon soon the dark moments will turn into light and that is 100 percent assurance that our God had promise us all…


  34. hi there.i wanted to share my story.i was working for 3 years in dubai.last may 2009, i was terminated in my company coz of recession, so i have no choice but to go back to the philippines with my daughter,my husband was left behind in dubai.i had 2 personal loans and credit cards as well, so unfortunately,i defaulted in my payments because my end of service was frozen in my bank account.i have contacted the banks when i was in the philippines.some of them did called me several times,but i could not pay.
    last year,feb 2010,i had been offered a new job in abu dhabi.nothing happened when i entered the country.but when we were about to have our vacation last november, i was stopped in the airport,and i was put in jail in dubai.my arabic boss and another friend was able to lend me money so i can go out of jail.my husband begged to the bank so they will let me out.i stayed 3 nights in jail(detention center).honestly,i didn’tknow what to think that time.but God really helped me so i was able to get out of there,because i might have gone crazy if i stayed longer.the bank agreed for me to settle the remaining amount in 1 yr.
    now,my problem is the other bank…

  35. Can someone answer some inquiries in here? Many people are seeking for some advise here because they are in the middle of difficulty and confusions.

    I believe that there ARE many more ways to avoid somebody to put in jail.

  36. I have bad debt in UAE and now I have changed my Passport.. What will happen next when I will enter UAE? is they will catch me through Iris Scan? Kindly advice me

  37. Hi
    Iam working since 33 months in Abudhabi and my visa going to end in 3 months .I have some 20000 AED debt on my credit cards.But at my present situation I couldnt pay the entire amount.Is there is any problem arise during my exit??

  38. Westerners that go to Dubai to work are usually a pretty poor sort of worker. They go to the UAE usually because they are considered to be one of the lessor performers in their home country, and the UAE seems happy to pay them large salaries and benefits as it is difficult to get better employees. Better employees have usually settled with families, are doing well in their careers and are less inclined to uproot and move to a place like the UAE. These poorer employees are just the type to run up debts and run away. They are the same as start large projects then quit, or oversell their abilities then fail in their jobs. Having said that, and having lived for many years in the UAE, the hypocracy that exists there is huge. For a muslim country, so much prostitution and booze (another attraction for the incompetent westerners) the fraud of not paying Indian construction workers and the common knowledge that the Sheiks import prostitutes from around the world surely cant promote the idea of honesty.

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