Abu Dhabi: In the United Arab Emirates (UAE), a personal loan taken from a lender may fall under the provisions of the ‘Loan Agreement’ format approved by the Central Bank of UAE.
When a personal loan is given to a borrower, a lender can collect a cheque as security against the limit of the personal loan.
There are several legal ways under which a lender can file a case against the borrower.
According to article 4(4) of the Personal Loan Agreement format
If a borrower receives a personal loan from a lender and misses three consecutive monthly instalments toward repayment or six consecutive monthly instalments toward repayment, this may be regarded as a borrower default event.
As per UAE’s Federal Decree-Law No. 14 of 2020
In case of a default, a lender may choose to deposit the security cheque of a said borrower for collection (if any).
If the said security cheque is dishonoured due to insufficiency of funds, a lender may file an execution case against a borrower along with a request to impose a travel ban.
Based on the filed cases, the court may approve the request and impose a travel ban on a borrower.
In an alternative move, a lender may approach the relevant court which has jurisdiction if the outstanding debt is more than Dh10,000 and request the imposition of a travel ban on a borrower.
Additionally, a lender has the option of filing a payment order case or a civil case against a borrower in a court to recover the outstanding debt.
If the final judgement is not in favour of a borrower, a lender may proceed to file execution proceedings against a borrower and that may include a request for an arrest warrant against a borrower.
A borrower should keep in consideration that If you lose a job in UAE, you are still recommended to pay regular monthly repayment instalments to avoid a travel ban.
In addition, if you are fired by your employer, your lender may use the end-of-service benefits payment made to your bank account by your current employer to pay down the balance of your personal loan debt in accordance with the terms of the ‘Personal Loan Agreement’ you have with your lender.
Notably, you can also let the lender know that you might lose your job. You can ask the lender to refrain from freezing your bank account in the event that your current job ends, and you have to assure that you will keep making on-time monthly repayment instalments until you find a new job in the UAE. You might ask the lender to restructure your current personal loan as well.
Source : Siasat