Financial Problems in the UAE

In the UAE, there are limited bankruptcy laws. Dishonouring a cheque is a criminal offence and may well result in arrest and a lengthy prison sentence. This article gives some suggestions about steps you might take if you find yourself in financial difficulty.

What should you do if you get into financial difficulty? 

As soon as you realise there is, or may be, a problem make early contact with your bank or the creditor.  The problem will not go away and will only get worse.
 
The banks will normally try and contact you as soon as payment is overdue. Do not ignore their calls. The larger banks may try and help you find a solution, which could include freezing interest, granting a payment holiday or restructuring the payments.  You may have access to money in your home country, which you can use to pay your debts in the UAE, or a family member or friend can help.

---

You might also be interested in:

• Budgeting 101 while living in Dubai
• How to pay your utility bills 
• Money talks you should have with your partner

---

It is in the interests of the bank to see money returned rather than have a customer in prison; generally the banks will only take criminal action as a last resort.  There are no personal bankruptcy laws in the UAE so you cannot declare yourself bankrupt.
 

Bounced Cheques 

Bouncing a cheque in the UAE is a criminal offence. Cheques are commonly used in the UAE for large bill payments and Post-Dated Cheques (PDCs) are often used as a method of guaranteeing payment, for example school fees or rent. Loans or mortgages may require monthly PDCs as security and credit card companies may require you to provide a signed, blank cheque which could be cashed should you fail to make a minimum payment.
 
When you write a post-dated cheque make sure that you will have the money in the account when it is dated to be cashed. Remember that any promises made by the other party not to cash the cheque may not be legally binding – you do not want to find yourself having to rely upon verbal promises when defending a bounced cheque case.
 
Where a company cheque bounces, the individual signing the cheque may be treated as the person responsible, so make sure you know what you are signing and whether there are funds to meet the payment.

 

What will happen if the bank or creditor involves the police? 

The police may contact you directly and request you report to the nearest police station. When you do attend, you may be arrested and taken into custody or you may be given the opportunity to resolve the issue. You may be able to leave your passport with the police while you resolve it, or in some cases, you will be held until you are seen by the prosecutor who may, or may not, grant bail.
 
The police may impose a travel ban. This means you will be unable to leave the UAE and you may be stopped at the airport.

---

SEE ALSO: Credit cards in Dubai

---

If you leave the country before a case is raised with police, you may face arrest or questioning when you re-enter the UAE, or even when transiting through the UAE. Given the increasing popularity of Gulf-based airlines, attempting to run away from debt issues by going home is not an option for many people either. Cases may stay on file for many years. Some UAE creditors have been known to appoint debt collection agencies in the home country to seek to pursue creditors who have returned there. If that happens, you should take proper legal advice as to the enforceability of any debts in that country.
 

What help is there?

In addition to your bank, there are organisations that can help you before things get out of hand.  They cannot give you money, nor can they get you out of prison if you are arrested, but you can talk to them confidentially and they can give you advice and support. Your Embassy may also be able to give you advice.

 
There are free legal advice clinics in both Dubai and Abu Dhabi - www.probonoclinic.org and the DIFC Courts operate a pro bono programme offering free legal advice on DIFC related matters – (www.difccourts.ae/pro-bono).
 
Remember:

• Dishonouring a cheque is a criminal offence in the UAE and you can end up in prison.
• If there is a case against you, you can face arrest when returning to, or transiting through, the UAE, even after extended periods away.
• When signing cheques on behalf of a company, make sure you know what you are signing and that there are sufficient funds.
• If you give post-dated cheques make sure you will have enough money in the account to honour the cheque.
• Seek help and advice in the early stages – don’t ignore the calls from the bank.

---

Please note that this article has been written by the British Embassy as general guidance and does not constitute legal or financial advice. The British Embassy does not accept any responsibility for the content and readers should seek their own professional advice.