The National 8 February 2014

 

Legal experts warn Filipinos against loan sharks

ABU DHABI // Filipinos who choose to go to illegal money lenders have been warned not to compound their problems by handing over their passports as guarantees for loans or agreeing to unreasonable interest rates.

“Some prefer loan sharks because the process is very fast and informal,” said Pearl Cabali, a legal consultant at Gulf Law in Dubai.

“These loan sharks appear to be very friendly and helpful when they hand over the money but they become the exact opposite when it’s time to collect it.”

Every month, Gulf Law receives at least four complaints from Filipinos about usurers. But only one in 10 pursue the case, Ms Cabali said.

Most borrowers who deal with loan sharks have been blacklisted from banks, have pending police cases or hold expired residence or tourist visas so they are not eligible to apply for a bank loan.

“Loan sharks are aware of their situation and capitalise on the fact that they cannot seek police assistance even if they are subjected to abusive practices,” Ms Cabali said.

Gulf Law, which also has a branch in Manila, assists Filipinos by negotiating with black-market lenders.

“It is always best to settle the case amicably,” she said. “We try to explain that they do not have a commercial licence to operate here and it is also illegal to charge a high interest rate.”

The company sends a legal notice to collect the passport and negotiate a realistic repayment scheme.

It took Christina –not her realmname – more than four years to seek help after borrowing from a usurer.

In January 2010, she was referred by a friend to a black market lender, also a Filipina, who was willing to offer her a Dh8,000 loan without interest. Christina, 28, gave her passport as guarantee for the loan.

“I was so desperate back then,” she said. “My tourist visa had to be extended for a month and I couldn’t get a job.”

Christina started paying off the loan six months later, when she got a job as a sales staff at a shopping mall.

“When I was unable to keep up with my payments she started sending me threatening text messages,” she said.

The loan shark decided to charge interest and the debt ballooned to Dh15,000.

“She threatened to file a case against me with the police and warned that she could have me deported,” Christina said.

The company negotiated with the lender, who agreed to reduce the amount to Dh10,500.

“I got my passport back,” Christina said. “I’m now trying to move on after my traumatic experience.”

UAE law prohibits such illicitmoney lending and it is illegal to demand the borrower’s passport or anything else, such as an Emirates ID, a labour card, an ATM card, or to ask them to sign cheques as a guarantee for a loan.

Anyone who lends money at unreasonably high rates of interest faces a jail term of at least three months plus a fine of at least Dh2,000, the law states.

“Most of the loan sharks are also Filipinos and take advantage of the weaker Filipinos,” said Ms Cabali.

Rashid Tahlak, a criminal lawyer in Dubai, last year said that the penalty for a lender taking advantage of a borrower’s need and weakness would be up to three years in jail plus a doubling of the fine. A repeated offence carries a jail term of up to five years, he said.

“One should not agree to a high-interest loan since they are bound by it,” Ms Cabali said. “But it is still best to ask help from family or friends to fund your expenses here.

“The problem is when you take a loan and purchase things that are not necessities.”

rruiz@thenational.ae



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