Debt Prison

A Debt Prison reader contacted me two months ago in regards to the desperate financial crisis she was facing in the UAE with outstanding debt. She began calling her creditors daily to convince them that negotiation was in their best interest as well as hers. With persistence and daily phone calls she convinced the creditors that they must agree to a workable payment plan. For Iara, the key to success against the UAE collectors was to keep the lines of communication open and contact them daily until a favorable solution is gained. The same can often be said about collectors here in the U.S..

**Disclaimer – Debtprison.net does not administer legal or financial advice. The contents of this website are my opinions on collection agencies and how to deal with them. Nothing on this website should be interpreted as legal advice or council. No opinions on this website should be used to replace the advice of your financial advisor or your legal council.

Without the valuable real-life experiences of my readers this blog would not serve as a reliable source of information for debtors. My thanks to each and every one who has taken the time to share their experiences with collection agencies! Here’s the comment Iara posted about winning against her debtors in the UAE. 

Dear Barry,

You asked me to come back to you, so I came back to tell you what happened to me after that disastrous affairs with credit cards in UAE. I mentioned to you how helpless I felt, and I wanted to run for my life and go back to Philippines, my home country. Well, the end was quite the opposite. “FIGHT OR FLIGHT”, I’ve chosen to fight. I am not a criminal to run away.

I started my personal struggle by reading your articles, and it really inspired me, and it taught me the things I need to know: the lies & intimidation of the collections department and how to deal with it. It hasn’t been an easy journey. I decided to tackle my Royal Bank of Scotland credit card first because it was smaller & easier to kill (only AED 6600). I spent almost two months calling them every single day. I’ve gotten to know all the people working there in Collections Department, from the several agents to the Team Leader and then finally the overall Manager.

I was turned down many times or was being referred to various, different people. They kept on telling me that someone will call me back, but nobody ever did. But I never gave up, I called the customer service and I asked for their help. I told them how unhelpful the agents of Collection Department were and if they could just give me the Manager’s number and name. Surprisingly, I got the information, and I talked to the Manager and recounted to him that I’m willing to pay but nobody’s helping me. I told him that I am planning to leave the country for good, and if nobody will arrange my account, I will just leave without paying it. After 30 minutes somebody called me back, they told me to pay the AED 1640.00 and for the succeeding 5 months, I will pay only AED 1000, INTEREST FROZEN (CREDIT CARD SETTLEMENT).

My other credit card started calling me, but I followed your advice. I didn’t talk to them, they would just make me depressed, and there was nothing I could do, having no money to pay the AED 5000 they wanted. So I just dropped AED 200 or AED 500 monthly to that said bank, and I was continuously charged the OVER LIMIT FEE & LATE PAYMENT FEE & ALL THE INTEREST (which is shockingly more than AED 850 per month)!!!!!!!!!!!!!

Weeks crept on. Then few days ago, I received an email from FGB offering me an Easy Payment Plan that has no other fees but only the 1% per month (so that’s only 12% per annum), and payable for 36 months . . . I was really happy when I received it. Imagine, I am charged more than AED 800 per month for the penalties and interest alone, but with this plan, I am actually paying only AED 238 interest per month with my outstanding divided to 36 months.

I signed the offer, and now I cannot imagine the relief I feel for having a debt-free life. ALMOST.

I hope that my story will serve as an inspiration to those desperate souls out there.

6 months ago, I thought about ending my life because of debt.

Now, I am sooo good. I lost a lot of money, but I earned an experience and I learned a lesson.

Grateful,

iara

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.

This website does not administer legal or financial advice. The contents of this website are my opinions on collection agencies and how to deal with them. Nothing on this website should be interpreted as legal advice or council. No opinions on this website should be used to replace the advice of your financial advisor or your legal council.

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.

Related Articles

Leaving offers no escape from debt in the UAE

Dealing with Financial Institutions in the UAE

Prison time for not paying debts in Dubai

Drowning in Debt: ArabianBusiness.com