I have worked in the UAE since January 2015 as a communications consultant and currently earn a salary of Dh7,000. My ex-husband carried out some fraudulent activities in India and took some loans in my name without informing me. I found out when the payments were missed and my relatives were harassed. To pay off the loans in India, I had to take loans on a much higher interest rate here and use credit cards for basic survival. I have a loan from Emirates Islamic for Dh88,000 and six credit cards all maxed out; in total I owe Dh90,000 on the cards. I have converted the two cards with the highest outstanding balances into installments, but life is getting difficult. I am struggling to pay the personal loan EMI, the converted credit cards EMI, my rent of Dh1,700 and the minimum amount due for the rest of the cards. No bank is ready to offer a buyout option as my debt burden ratio is very high. When the divorce petition was sanctioned, the court ordered my ex-husband to pay me the money for the loans in India so I have closed those. He had agreed to pay a lump sum of 10 lakhs rupees (about Dh57,000) in April 2017 and so far he has not paid a penny. If he had paid up, I wouldn’t have been in this situation. I need to file a case of contempt against him but the lawyers also require money and I don’t have it. What shall I do? CC, UAE
Debt panellist 1: Philip King, head of retail banking at Abu Dhabi Islamic Bank
This is a undoubtedly a difficult situation in which you are the victim of having been defrauded by your ex-husband, and now find yourself financially liable for his misconduct.
I understand that you are still expecting him to pay a lump sum of R10 Lakhs to assist with the repayment of your remaining debt. However, as the payment is already three months late and given his previous conduct, I think it is wisest for you to move forward with a repayment schedule to clear this debt assuming that the money will never be sent.
To begin with, understand that any bank in the country should be able to provide you with a loan to repay your card debt, in line with the basic terms laid out by the Central Bank of the UAE, and provided your employer is listed as a trusted company with the bank.
The biggest loan you could receive would be a 20 times multiple of your current salary – so Dh140,000 in your case. Depending on how the bank evaluates your history and circumstances, you can expect a rate of anywhere from 6 per cent to 12 per cent on this loan. These funds should be used to immediately pay off as many of your cards as possible and, if necessary, pay legal fees which can help recoup the lump sum as ordered by the Indian court. With rates on most cards significantly higher (30 per cent to 36 per cent), you will find repayments on the single loan more manageable than on multiple cards.
Having cleared the outstanding balance on your six cards, you can focus on repaying your initial loan from Emirates Islamic, and the new loan. If you find that the lump sum payment from your husband does eventually come through, you should consider this an additional windfall to repay as much as possible of whichever loan has the higher interest rate.
What is certain is that you should absolutely avoid taking out any additional cards to cover the costs of living or to attempt covering repayments of your loans.
In summary, apply for an additional loan which is tied to your salary, use it to repay your cards and continue to make payments on the two loans until both have been cleared.
Debt panellist 2: Keren Bobker, independent financial adviser with Holborn Assets
I do not know the monthly repayments on the personal loans or the minimum monthly repayments on the credit cards but with a low monthly salary I can imagine that there is little left over and life is tough. It is clearly very unfair that CC's ex-husband has behaved in this way but I would not expect any UAE bank to be particularly sympathetic as they will say that she took out the debts and is therefore legally responsible for the repayments. It appears that she is not in arrears so that is positive.
If the existing debts exceed the UAE Central Bank's DBR of 50 per cent of income, then no UAE bank is permitted to advance any further credit, and generally this would be unwise. Does CC have any assets in India, or elsewhere, that she can sell to cover the court fees and/or reduce her current debts?
I assume that the divorce went through a court in India so the lump sum that the ex-husband has to been told to pay comes under the jurisdiction of the Indian courts. I understand that there are costs associated with following up to try and get payment from the ex-husband but it is clear that he is the one who has broken the court agreement and that he must pay up.
From my brief research, the court fees do not seem high but I appreciate that there will also be lawyer’s fees and possibly travel costs. By comparison however, these costs are relatively low compared to the amount that the court has ordered the ex-husband to pay with rupees10 lakhs being approximately equal to Dh56,800. Will a lawyer, perhaps the one that handled the divorce, agree to act with payment deferred until funds are paid by the ex-husband? Is there a family member or friend who is able to lend any money for this reason, just to cover the costs, so that the monies owed can be claimed? I hope she can find some assistance to improve her overall situation.
The Debt Panel brings together four financial experts: Philip King, the head of retail banking in the UAE at Abu Dhabi Islamic Bank; Ambareen Musa, the founder and chief executive of the comparison website Souqalmal.com; Rasheda Khatun Khan, a wealth and wellness planner and founder of Design Your Life; and Keren Bobker, The National’s On Your Side columnist and an independent financial adviser with Holborn Assets in Dubai. Together they answer queries in a weekly online column to help readers better tackle their debts. If you have a question for the panel, write to pf@thenational.ae.