When it comes to debt, there are many things that people in the UAE need to be aware of. The first thing to understand is that there are different types of debt, each with its rules and regulations. The authority is strict on debts, which is why it’s essential to know the ins and outs of each type before getting into any debt agreement. Here is an overview of some of the most critical aspects of UAE debt law.
Types of Debts Recognized by Law
There are three main types of debts that are recognized by UAE law:
This is a debt that is backed by collateral. If you default on the loan, the lender can seize the collateral to recoup their losses. In most cases, the collateral is some property, such as a car or a house.
This is a debt that is not backed by collateral. Thus, if you fail to honor the loan terms, the lender cannot seize any of your assets. However, they can still take legal action against you to recover their losses.
This is a type of debt in which someone else agrees to pay back the loan if you default. This person is known as the guarantor. In most cases, the guarantor will be a family member or close friend.
Debt Recovery Rights
UAE laws allow people to recover their debts in several ways. The most common method is through legal action. This means that the person who owes the debt will be taken to court, and an order will be issued to pay back what they owe, plus any interest and fees associated with the debt.
People also consider using debt recovery companies in the UAE. These are private companies that specialize in recovering debts. They will typically work with the person who owes the debt to devise a repayment plan. If the person fails to stick to the repayment plan, the company can take legal action against them.
When choosing such professionals, selecting one with a good reputation and who is long-serving is essential. Sometimes, check if the company is registered with the Chamber of Commerce. A reliable debt collection agency in the United Arab Emirates will always take the time to understand your case and come up with the best solution for you. Ordinarily, as you do the background checks on the agency, the first thing you should look for is it’s licensing. Confirm also their way of working.
Understanding UAE’s Current Bankruptcy Law
Bankruptcy is a legal process that allows people to get out of debt. It can be a complicated process, so it’s essential to understand all aspects of UAE bankruptcy law before filing for bankruptcy.
Under UAE law, there are two types of bankruptcies: voluntary and involuntary. Voluntary bankruptcies are filed by the person who owes the debt, while the creditors file involuntary bankruptcies.
Once bankruptcy is filed, all of the person’s assets will be frozen. This means they will not be able to sell or transfer any of their assets. The court will then appoint a trustee to oversee the person’s finances. The trustee will work with the creditors to devise a repayment plan.
If the person can stick to the repayment plan, they will be discharged from bankruptcy. This means they will no longer owe any of the debts included in the bankruptcy.
However, if the person cannot stick to the repayment plan, they may have their assets seized and sold off to repay the debts. Sometimes, the person may be ordered to pay the debts in full.
Debt Consolidation in UAE
Debt consolidation is a process in which multiple debts are combined into a single loan. This can be an excellent way to reduce the interest you’re paying on your debts and make your monthly payments more manageable.
When consolidating debt, getting a loan with a lower interest rate than the interest rates on your existing debts is essential. It’s also important to make sure you can afford the monthly payments on the loan. If you’re considering consolidating your debts, it’s a good idea to speak with a financial advisor to get advice on whether or not it’s the right choice for you.
Sometimes, people use debt consolidation to get out of debt. However, this is not a good idea, as it will only extend the length of time you’re in debt. It’s important to remember that the goal of debt consolidation should be to reduce your monthly payments, not to eliminate your debt.
UAE debt laws are designed to protect both the creditor and the debtor. It is essential to understand these laws before taking on any debt. By doing so, you can be sure that you are getting into an agreement that is fair for both parties involved.