Sporting 1.5 million souls (70% of which are randy men) the United Arab Emirates, or UAE, is home to one of the earth’s most popular regions for debtor’s prisons. If you’re a man, you’ll need a lot of debt, to buy junk with so you can outmaneuver and outrun those other young bucks, who are competing with you for the handful of beautif women not ‘married-off’ already in some sort of a family arrangement. The other women, the immigrant workers, are probably indebted to their employers and you’ll have to buy them off…. just for a date in your new Escalade, which you signed away your life for. What a bargain… just kidding. Defaulted debt in the UAE won’t die until the debtor does. There is no debt settlement or bankruptcy. I was originally going to write this article about just the debtor’s prison in the UAE, but after a little research I realized that I needed to include more information regarding their issuance of credit. See also, DebtPrison.net article ‘Will debt follow you abroad.’
Your word is credit
The UAE doesn’t have credit reporting agencies like Equifax (yet) because they still try and manage the country’s affairs pretending as though they live in a desert wilderness, void of any skyscrapers or pocketbook hustlers. The credit industry, if you want to call it that, doesn’t believe it’s their business to hover over your credit report. These reporting agencies are impersonal and are not part of a legitimate business contract between two human beings… hence they do not exist. You can literally get personal loans for up to $68,000 with nothing more than your word and a blank check.
The rising personal wealth, real estate boom, and bubbling petroleum brooks, will often lead average consumers in the UAE to bite off more debt than they can chew. In the UAE, like much of the Arab world, you are expected to honor your word. Who they hell do these Arabs think they are? We certainly don’t need any of that type of attitude floating around here in the U.S.. Yes you are expected to honor your word, and with it, you can have access to much more credit than you should logically have. In this regard, the United States and the UAE are similar.
Their system of personal checks
In the UAE, if your check bounces they will put you in jail. Credit is extended to you in a series of IOU’s. For example, if I want to buy a car for $10,000 and make payments for two years then I will have to write 24 checks – in advance! I will give the creditor 24 checks in the amount of $416.66 and dated in advance for each month I would be making payments. The bank then deposits each check in the month for which it was written.
It is illegal to write a blank check in the UAE… or at least to have such a blank check, signed by you to be cashed. Therefore when taking out large personal loans, the bank will require you to hand them a signed check with a blank amount. Their logic is simple enough: fail to pay them and they cash the check – which leads to your arrest and imprisonment. They may simply make you serve 3 months for the charge of writing a blank check. But if you cannot pay the loan, or find someone to pay it for you, the prison may become your new home. In fact, as I write this article 30-40% of those imprisoned in Dubai’s central jail, are there for not having paid their debt.
A good portion of the law enforcement’s time is wrapped up chasing defaulting debtors. In the UAE there is no such thing as filing for bankruptcy.
Here’s how the imprisonment would play out
You’re new in town, and hoping to impress the only three single (of age) female immigrants left in Dubai. You borrow $50,000 for some new duds and a used BMW. You’ve got a good-paying job building skyscrapers which provides a much needed shadow for those baking in the sun over at the debtor’s prison. Well times get tight because you blew too much money impressing the one remaining single female (the other two were deported because they had hepatitis) and your boss, who frequently abuses foreign infidel workers (like you), drops your pay so he can afford a new vacation to America… where he’ll cheat on his four wives.
The creditors begin calling you - and since you don’t have the money to make your monthly payments you ignore their calls. Finally the creditor, tired of trying to convince you to pay the debt, files suit against you. You ignore the court summons because you are broke, so the court puts out a warrant for your arrest. The debtor is arrested and sits in jail until the debt is paid. The debtor could also have ended up in jail, if the tired bill collector, submitted your blank check to the bank. Either way you are arrested and sitting in jail until the debt is paid. You cannot get out of jail so you can work and repay the debt. You will remain in jail until a relative, charity group, wealthy businessman or even a member of the ruling family pays the debt. It’s a good thing you built that skyscraper for the shade is oh so cool.
Planning on leaving the UAE with defaulted debt to escape payment? I wouldn’t go back because they’ll blacklist your passport and arrest you at the airport upon reentry. Straight to jail with your sorry butt! In fact the entire Middle East can be a problem for you since neighboring countries may extradite you back to the Dubai creditors. Debt in the UAE never dies, it never goes away.
If you want folks to honor their word the UAE’s debt prison may seem a logical course of action. I think it certainly makes people think twice before using credit, and that I believe is a very good thing. The largest problem for all of us, including those in the UAE, is the reverence a bustling economy places on the availability of credit. We need to save and pay cash, not splurge and use credit. An artificial economy which relies heavily on the relaxed availability of credit… has the side effect of creating a debt prison for those attempting to chisel out an existence in an impelling world.
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Yo peeps, i was in dubai prison for 4 cases. 1 is First Gulf Bank for 40K, was sentenced to 1 month as i did not appear in court, 2 is Dubai First for around 20k again sentenced to a month, 3 is Emirates Bank for 25k, sentenced for 1 month and 4 is MAshreq Bank for 6,700. All credit card debts. 1 month is considered 23 days in central jail… if you want me to go thru details with you on how i ended up in prison, step by step the let me know and i can tell you complete details. But my problem now is that I am being blasted with legal notices by debt collection agency, al tahseel for mashreq card (while my case was only for 6,700), amounting to 20k. i am also being pestered by al wasl legal office for first gulf bank. I have already served my term for these cases and i know that they cannot file another criminal case but only civil. The big Q is are these collection agencies own right to file a civil case against me and/or why are they asking me a much bigger amount of debt? I dont know how to deal with them, but i do ignore them. MY reason, i already served. I would be grateful if you could let me know how to deal with them and what should i do? many thanks for your time and help….
Hi,
I had worked in UAE for 7 years and got a loan from a bank in 2006. At the end I had to come back to my country to serve an emergency and then I could not go back. Soon after 2/3 installments were not paid, I was contacted by some collection agencies. I asked them not to contact me as i am not in position of serving my loan. After 2/3 months they did not come back. Now I am getting a job in UAE and gotten a visit visa a few days back on which I did not travel because I was not sure of what would happen on airport. Now again company is offering me employment visa. I am willing to work and return back the remaining loan but will they allow me to do that.
Pleae tell me (since i live in America) and the uae cant touch me or do anything to me. please tell me or give me a website where i can apply for very very very large personal loans without any credit checks or background checks, maybe credit cards too, i would also like to know if there is a bank in dubia i can open up an account with without going there, so that the idiots will approve me for a very large loan and then ill just refuse to pay it and thus teach them a lesson about not checking credit reports, he he he easy money is coming soon !
Mai,
I do not know if you can get imprisoned. You need to talk with a lawyer (someone familiar with Egyptian law) to see if you can possibly be imprisoned or arrested for debt left behind in UAE. It all depends on your countries extradition agreement with UAE. You’ll need to look that up yourself or hire a lawyer to investigate for you.
Best, Barry
Keep me posted on this matter as it helps others to know how your situation works out!
Please Help. Will i go to prison because of my credit card? =(?
Pleaseeeeeeeee guys help me. I used to work in UAE and i left the country 5 months ago leaving behind unpaid credit card with amount of 20,000AED. and as you know you have to submitt a signed cheque in order to take a credit card. Now am back to my country (Egypt) and the bank didnt try to contact me before, but today after 5 months they called me, the same bank but the egyptian branch, and they asked me to pay the full amount otherwise they will submitt the cheque to the police and i will get imprisoned because of the cheque they have plus i will be blacklisted from entering the GCC.
Is there anyway that i can’t get imprisoned =(( appreciate your soonest reply
Can the collection agencies out sourced by the banks in UAE exact payment or punishment in the failure of the person paying up or refusing to pay the bad debt? What will be the outcome of the person once they have contact him and he refuses to or is unable to make the payment. Please advise….
If any readers contact the Kim at the below email let me know how it goes…
If you are faced with the following issues in dubai:
absonconded/uae visa not cancelled
abandoned your mortgaged property behind in uae
blacklisted due to outstanding bank debt
then contact us. i can help you resolve the matter legally. We have already helped over 20 people in the last 6 months. Most of them have re-entered uae and now found themselves a new job/life.
hostiletakeover2009@googlemail.com
regards
kim
Here is something interesting:: Pay attention to the last sentence. This is from http://www.gulf-times.com/site/topics/article.asp?cu_no=2&item_no=65871&version=1&template_id=46&parent_id=26
A cheque can be defined as a negotiable instrument drawn against deposited funds for payment and undertaking to pay a determinate amount of money to a specific person upon demand based on existing legitimate reasons. According to Article 618 of the UAE Federal Commercial Transactions Law No. 18/93 “A cheque drawn and made payable in the country or abroad must be presented for payment within six months. The time limit mentioned shall run from the date shown in the cheque as to be the date of issue. Presentation of a cheque to a bank, reserving its value by telephone or cable from such bank with drawee bank, as well as presentation thereof to a legally recognised clearing house shall be considered presentation for payment.”
Regarding bank mistakes, if the bank does not follow the instructions of the drawer as identified on the cheque, this would be considered a breach of the contract between the bank and the drawer. The drawer may be able to recover damages or compensation. As for the bouncing of cheques, the UAE legal system considers the cheque instrument of payment as substitute of money, consequently the non-payment of cheque can be pursued not only through civil litigation but also as a crime that makes necessary to inflict criminal punishment under criminal proceeding as per Article Art. 401 of the Federal Penal Code No. 3 of 1987.
The said Article provides, “Shall be punishable by confinement or fine any individual who, in bad faith, draws a cheque which does not have provision which could be withdrawn or which has a provision less than the amount of cheque or who, in bad faith, after issuing a cheque withdraws all or part of the provision and renders the balance in sufficient to settle the amount of the cheque or, in bad faith, orders the drawee not to pay the value of the cheque or, in bad faith, draws or signs a cheque in such a manner as to prevent it from being paid”.
The drawer shall be punished with imprisonment that may not be less than one month and not more than three years or with fine not less than Dh100 and not exceeding Dh30,000. Moreover, the Civil Court may order in addition the punishment of publishing the extract of the judgment in a daily newspaper, to withdraw the chequebook of the convicted and to ban granting new chequebook for a period to be decided by the court.
With regard to security cheques, since cheque is an instrument of payment and undertaking to pay its value based on legal grounds, the drawer would be allowed to prove the real reasons behind the issuance of the cheque. A cheque expressively made as security for performance of obligations or as a trust could not be the basis for a criminal charge. In this event the case will be heard by Civil Court only.
i would just want to warn folks who are in deep debts in the UAE of a certain company offering debt consolidation or whatever they may call it, for I have been a victim of the said company. I was just so lucky to get out of it and found out very soon that i was scammed before they take my money… When you are in debt, do not put your trust on anybody who offers help. You can solve your money problems on your own, without paying anybody else but your creditors. Don’t be a victim!
Hey Mark, I just checked out a couple of articles which indicate this is exactly the case… Very hypocritical indeed.
Where Dubai leads, Britain could soon follow
Ironially the Dubai Gov. is in debt thro’ its various Dubai World Companies specifically Nakheel, and they cannot aford to pay back the interest payments.
The creditors are British banks HSBC, Lloyds (43% HMG owned), RBS (84% HMG owned) & Stan Chartered.
So here we have Dubai Gov. not paying thier debt to British banks partially owned by British Government & Tax payers and yet if the British get into debt in Dubai, the Dubai government put them in jail.
Very hypocritical.