Why Expats Shouldn’t Run Away From Debt In The Gulf

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Expats in the United Arab Emirates are horrified to find out that unpaid debts can end up in a criminal court or even jail.

In Western countries, bankruptcy and consumer protection laws safeguard borrowers from fines and prison if they are in arrears with loan or credit card repayments.

Things are different in the UAE, where banks can apply to the courts to have a debtor sent to a prison jail as a hostage until the debt is repaid.

The laws seem barmy and archaic. After all, how can someone repay a debt from behind bars?

The response from the banks is they can’t and the debt still gathers interest and charges while they are inside – but their relatives will soon gather the cash to free them from their cell.

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Fleeing without paying

Many expats in debt try to flee the country before the authorities catch up with them.

But the banks and the courts have a long reach.

One way a debtor in a foreign country is tracked down is through Interpol. Interpol is a co-operation network of police forces around the world. Banks in the UAE will list the debt as a fraud and ask Interpol to place a red notice against the borrower’s name. If the debtor crosses a border into an Interpol country, they can be detained for extradition.

Courts in the UAE can sometimes pursue a debt case through the courts in England. Cases have resulted in UAE banks to seize assets and property from runaway debtors in the UK.

Bouncing a cheque can lead to jail

Another misconception is bouncing a cheque was decriminalised in 2017, allowing courts to fine offenders if the cheque is below a certain limit. The bad news is the fine does not clear the debt but is only a punishment for bouncing the cheque. The debt is still liable for time in jail.

Time is not a healer either. In many countries, debts are unenforceable after six years, but not so in the UAE, where banks have been known to chase cases that are 15 or more years old.

And don’t forget the rules apply to all Gulf States, not just the UAE, so if you leave Dubai and get a job in Oman, you can still be chased for the debt as if you were still in Dubai.

Best advice is not to run away from the inevitable – face up to the situation and speak to the bank about some sort of repayment deal before leaving the UAE.

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