TFC - Handling Hard Times: When Debt Becomes Unman

Handling Hard Times: When Debt Becomes Unmanageable

Posted by: AdminMH

May 30, 2019

Handling Hard Times: When Debt Becomes Unmanageable

When you keep on borrowing money and debt becomes unmanageable, you will experience feelings of fear, stress, guilt, shame or anger. If you are in debt, you may receive phone calls and letters from the companies or people you owe money to.

What are the warning signs that you are headed for financial trouble?

Are you regularly spending beyond your budget?       Yes or No
Are you living from payday to payday?            Yes or No
Are you unable to meet rent payments?   Yes or No
Are you always paying only the minimum credit card bill?    Yes or No
Are you not aware how much your total debt is?       Yes or No
Have you maxed-out more than 2 credit cards?     Yes or No  
Are you consistently paying bills late?       Yes or No
Are you hiding your debt situation from your spouse?       Yes or No

If you answered yes to any of the questions above, you really need to re-examine the way you handle your finances. You must aggressively pay off your debts and don’t hesitate to seek professional help.

Handling Hard Times

  • Call your bank to arrange a loan restructuring
  • List all expenses and determine which expenses can be eliminated, reduced or deferred
  • Control your spending accordingly
  • Always pay by cash, do not get additional loans
  • Take advantage of available programs, benefits  and insurance
  • Eat well, sleep well and maintain social contacts and a positive outlook

How to Settle Loans?

  1. Contact the collections department of your bank and advise you would like to make a settlement.
  2. If you have defaulted on several loans within the same bank, inform the collections officer that you would like to settle all your loans. For example, if you have credit cards, personal loans and car loans issued by the same bank, you should settle all loans in one agreement—because the bank can still file a case against you for the other loans which you did not settle. 
  3. Important questions to ask your bank:
       a. How much is the outstanding balance per account
       b. Have they filed a police case against you? If yes:
            i.   Which police station?
            ii.  What is police case number?
            iii. When was it filed?
            iv.  How much is the value of the bounced cheque?
      c. What are the available settlement options?
            i.   Minimum settlement amount for one-time payment?
            ii.  Longest installment term and how much is the monthly payment?
            iii. Minimum payment to release the police case, and what would be the payment terms for the remaining balance
  4. Once you have agreed on a settlement option, request for the settlement letter.
  5. Make the payment as per the settlement letter. Do not make any payments unless you have the settlement letter.
  6. Get the Release/Clearance Letter once you have complied with the payment terms.
  7. If you have a pending case, secure clearance from the bank’s lawyer.
  8. Present the clearance to the police station so your records can be cleared from the police and immigration systems.


  1. This is the process for out-of-court settlement.
  2. The courts or the police will not be involved.
  3. Settlement will release you from criminal/police and civil cases.
  4. If the bank condoned part of your debt, your name will be included in the Central Bank blacklist.

Police Case vs. Civil Case for Bounced Cheque/Unpaid Loan

  Police Case Civil Case
Applicable Law Article 401 of the Penal Code Article 272 of the Civil Code
What is the complainant asking the court? For the offender to be punished for issuing a bounced cheque For the debtor to pay the amount owed
What is the punishment? Jail term and/or payment of fine/penalty (not the amount of the bounced cheque) Payment of loan obligation plus damages or imprisonment if unable to pay
What offices are involved? Police, Prosecutor, Criminal Court Civil Court
Can I leave the country? No. Yes, unless the bank files a travel ban
Can I cancel/transfer/renew my visa? No. You can process your visa once you have served the jail term/paid the fine or settled your loan. Yes.
Can I renew my passport? Yes, request the police or court Yes, request the court
Will I be deported? No No
Can it be filed even if I’m not in UAE Yes Yes
Will service of sentence erase my debt? No. Your bank can still file a civil case for collection of the amount you owe. Yes, your payment of the amount ordered by the court will extinguish your loan obligation.
Will imprisonment erase my debt? No. Imprisonment will only clear your case for issuing a bounced cheque. No. Only payment of the amount owed will erase your debt. Creditor can still request a travel ban even after you have served your jail term.
Can I enter into a settlement during the trial? Yes, as long as no judgment has been passed. The case will be dismissed if you will pay the amount demanded by your creditor. Yes, you can enter an amicable settlement at any time, even after judgment has been rendered.
Will I go to jail even if I surrender my passport to the police/court? No, during the trial. Yes, after the judgment (if you are proven guilty). No, during the trial. Yes, if you cannot pay after the judgment.

For more information on Central Bank rules on debt collection, readers can visit

Practices Areas

Gulf Law Consultancy FZ LLC is a limited liability company under the Fujairah Culture and Media Authority (Creative City).

This website is provided for general information purposes only and does not constitute any legal advice. It does not take into account your objectives, your instructions or all of the relevant facts and/or circumstances.

Gulf Law accepts no responsibility to any person who relies on the information provided on this website.