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.
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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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