Question: I am a single mother who has fallen on hard times. I am struggling with significant credit card and loan debts from multiple banks. Are there any legal options available to help me manage this situation? I am not looking for charity – rather, is there a way to restructure all my debts from multiple banks into a single loan so I can repay them in monthly instalments?

Answer: In the UAE, banks are required to support customers facing financial difficulties by offering qualified credit counselling, encouraging open discussions about debt concerns , and giving fair consideration to alternative repayment options such as rescheduling or restructuring.

This ensures that borrowers are treated fairly and have a chance to manage their obligations in a sustainable way. This is in accordance with Article 5.2.4.1 of Consumer Protection Standards, issued under Circular No. 8/2020 by the Central Bank of the UAE.

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“Licensed Financial Institutions must provide Consumers with qualified credit counselling services on debt problems and encourage consumers to feel confident about approaching the Licensed Financial Institutions and openly discussing their financial concerns. When approached by a consumer, the Licensed Financial Institution must give reasonable consideration to alternative arrangements that could enable Consumers to overcome their repayment/payment difficulties.”

If a bank and a customer agree on a new repayment plan, the bank must, within 10 business days, give the customer a written document explaining the new terms. This must include a detailed payment schedule, showing how each payment will go towards interest/profit and the outstanding balance. The bank must also inform the customer that details of any arrears (missed or late payments) will be reported to the Credit Bureau. This is in accordance with Article 5.2.4.4 of the Consumer Protection Regulation.

The banks may carefully check a customer's total debts, including both secured and unsecured loans and also verify this information with the Credit Information Agency before offering a new loan or restructuring an existing one. This is in accordance with Article 7.1.4.8 of the Consumer Protection Regulation.

“Licensed Financial Institutions must conduct a comprehensive due diligence on the consumer's overall indebtedness by obtaining information on the consumer's outstanding debt obligations, including both secured and unsecured financing. Verification with the Credit Information Agency must also be completed.”

In accordance with the aforementioned provision of the law, you may approach your bank(s) to request a consolidation loan or restructuring, where your multiple debts can be combined into a single repayment plan with fixed monthly instalments. However, the approval may depend on your eligibility and the bank's assessment of affordability, including compliance with the Debt Burden Ratio (DBR) provided by the Central Bank of the UAE. However, the regulatory framework ensures that banks should not ignore such requests and must provide you with fair and transparent options.

Ashish Mehta is the founder and Managing Partner of Ashish Mehta & Associates. He is qualified to practise law in Dubai, the United Kingdom and India. Full details of his firm on: Readers may e-mail their questions to: ... or send them to Legal View, Khaleej Times, PO Box 11243, Dubai.

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