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Matthew wrote to me  and asked the following question.

“Dear Steve,

I need an guidance from you. sir, i have outstanding totaling to 200,000dhs in dubai. i am still in dubai and with 6500dhs salary it has become impossible for me to repay all of them. i worte to all banks to allow me start paying of for small cards and switch to bigger cards and then loans. all appreciated the idea but asked me to start repaying their bank on preriority basis. this again became a trouble for me as no bank is agreed to wait for their turn of payment time. sir in this connection is there any way out with which i can approach police or court and ask them for help to allow me pay small cards and then swtich to bigger ones and then to personal loans. i dont mind if the court or police hold my passport till i clear all the debts. i have fair intention to repay all my outstanding as i am still on job, kindly advice please. thanks

Matthew”

Dear Matthew,

I wish I had good news for you but I don’t. The UAE has very strict regulations against debtors. Under Sharia, which prevails in Dubai, the punishment for defaulting on a debt is severe. Bouncing a check, for example, is punishable with jail.

There is no process or regulation that requires creditors in Dubai to treat you fairly or to participate in any organized plan to repay your debts on an affordable basis.

The good news, if any, is that while a creditor might legally charge you with defaulting on your debts, it is reported that the courts in Dubai have a backlog of debt cases to work through.

Here is a recounting of an ex-pat that faced debt problems in Dubai:

“When we realised that, I sat Daniel down and told him: listen, we need to get out of here. He knew he was guaranteed a pay-off when he resigned, so we said – right, let’s take the pay-off, clear the debt, and go.” So Daniel resigned – but he was given a lower pay-off than his contract suggested. The debt remained. As soon as you quit your job in Dubai, your employer has to inform your bank. If you have any outstanding debts that aren’t covered by your savings, then all your accounts are frozen, and you are forbidden to leave the country.

“Suddenly our cards stopped working. We had nothing. We were thrown out of our apartment.” Karen can’t speak about what happened next for a long time; she is shaking.

Daniel was arrested and taken away on the day of their eviction. It was six days before she could talk to him. “He told me he was put in a cell with another debtor, a Sri Lankan guy who was only 27, who said he couldn’t face the shame to his family. Daniel woke up and the boy had swallowed razor-blades. He banged for help, but nobody came, and the boy died in front of him.”

Karen managed to beg from her friends for a few weeks, “but it was so humiliating. I’ve never lived like this. I worked in the fashion industry. I had my own shops. I’ve never…” She peters out.

Daniel was sentenced to six months’ imprisonment at a trial he couldn’t understand. It was in Arabic, and there was no translation. “Now I’m here illegally, too,” Karen says I’ve got no money, nothing. I have to last nine months until he’s out, somehow.” Looking away, almost paralysed with embarrassment, she asks if I could buy her a meal.

She is not alone. All over the city, there are maxed-out expats sleeping secretly in the sand-dunes or the airport or in their cars.

“The thing you have to understand about Dubai is – nothing is what it seems,” Karen says at last. “Nothing. This isn’t a city, it’s a con-job. They lure you in telling you it’s one thing – a modern kind of place – but beneath the surface it’s a medieval dictatorship.” Source

If you are not a resident of the UAE or a citizen of the GCC (see I Am Pregnant and in Debt in the UAE But Will Not Be Able to Pay My Bills for Ten Months. – Leifam for GCC information) then you should consider getting out of the UAE as soon as possible to avoid arrest once you default. This is what many people do when faced with an otherwise unworkable situation.