How Many Months are in Jail for Loan Defaulters in UAE?

July 08, 2023 Loan Comments Off on How Many Months are in Jail for Loan Defaulters in UAE?

loan defaulters in UAE

UAE is completely different from Western countries. This country’s all laws are not similar to other countries. Further, financial institutions offer loans in a unique way. The lenders approve the application of debts without the need for many days. The application process is simpler. All residents & expats can avail of the loan to meet their basic urgent needs of finances. The banks & online lenders are in large numbers. And they ensure to offer a competitive interest rate. Moreover, the tenure duration is also longer, accordingly debt amount. But what will happen if a borrower fails to repay the amount within the duration?

It is a serious issue that you have to know. It is easier to take loans, but repaying is crucial. Some people think that nothing will happen if they will repay too late after finishing the tenure. But it is not accurate. There will be serious consequences for loan defaulters, including arrest. Another question is about how many months are in jail for loan defaulters in UAE. The lender and the debt amount are the factors that decide the sentence for the defaulters.

Loan defaulters in UAE jail

According to the UAE’s laws, the loan defaulter is a criminal. This matter does not relate to the civil. It is a crime in the United Arab Emirates. The punishment for debt defaulters is jail for at least three years. The period of this sentence may increase if the defaulter is not serious in this matter. This action against the debtor does not collect money from him and give it to the lender. However, the debtor gets an opportunity to not be arrested for 30 days. During this duration, the individual gets a chance to arrange the debt amount and repay it. Emirates Loan instructs its clients before the end of tenure to arrange the repayment amount. So the clients will not go through serious situations.  

On the other hand, there is a drawback if the person is still not enabled to repay the amount after being free for 30 days from jail. The creditor has the right to file a case against the debtor. As a result, the individual will send again to jail. He will not get freedom from this sentence if he does not repay the debt. You have to carefully give your attention to the repaying.

Calls from Debt Collectors: For warning

The banks and all other lenders are very cooperative with their clients. They do not want that their clients face a harsh situation if they do not repay within tenure. Therefore, financial institutions take help from debt collectors to contact you. The first preference of the lenders is to always directly communicate with the debtors. But, if you ignore the bank’s reminder of repayments, the debt collectors will contact you.

The debt collectors’ calls are on behalf of the banks. In some cases, a person still ignores the calls or does not give a positive response to submitting the overdue debt amount. Thereby, they reach his office or home to get the amount. The smart idea is to talk directly with your lender about a new agreement. The reason is that if the collectors are involved in the matter, you will get more stress. And the failure of collectors to receive the debt results in the sending of a borrower to jail.

Deposits of Blank Cheques

Some lenders have mentioned the requirement of blank cheques when you apply for loans in their terms. However, many banks do not require it. It is for the security that the debtor will repay the amount. The UAE law has given the right to the lenders to deposit this type of security cheque. Whenever you do not repay the loan, the loan provider can take legal action. In this scenario, you cannot leave the country. If you try to leave UAE, another criminal case will file against you.

The result of the cheque bounces

The security cheques will also bounce in some cases. The issue of bouncing cheques also results in facing a police case. In the past, the cheque bounces is an offense of criminal. But now, there is a new change in the UAE’s laws. Thus, this problem is now a civil offense. You will not get arrested by the police. But, there will be a penalty of fine. Emirates Loan takes specific measures at the time of giving the loans to borrowers. This financial company looks at the applicant’s income and the request application for debt amount. Their professionals help in providing the finances according to need. In this way, there is no higher chance of loan defaulters.

Consequences of loan default in UAE

There are numerous consequences that a loan defaulter has to face in the UAE. The two major things are the police case and the travel ban. There is no compromise if you think you can travel from UAE to another country without paying your debt.

Police Case Against You

The police case against you will file when you are not repaying the amount. In the starting months after the tenure, you will only get a warning, but then after a long time, the lender will file a police case. The police can haunt the borrower to get the due money of the loan from him.

The connection between Police & system of immigration

In the UAE, there is a close connection between the police and the system of immigration. The travel ban is for all defaulters of loans. The immigration system has a list of defaulters to ensure the travel ban. Such individuals cannot enter or leave the United Arab Emirates. The laws for legal actions of non-repayments of debts are now much strict.

So, if you plan to leave UAE with an unpaid loan, change your plan. This cause is due to the fact of the travel ban for all defaulters, no matter how emergency you need to leave. It is our suggestion to pay your debt to avoid any legal problems. In addition, you should do it also for morally. Otherwise, police are always active in their action if you break the law of repaying the loan.

Can a UAE lawyer negotiate with the borrower’s lender?

Many of the clients in the UAE think that hiring a lawyer will help them negotiate with their lenders. But the creditors want to communicate directly with debtors instead of their hired lawyers. Many times, the lawyers do not contact the creditor in an appropriate way. If they are too late in the communication with the loan providers, the case will definitely file. Another drawback of hiring a lawyer is that you will need to pay the fee. The lawyer’s fee is also not lower, so it may add more financial stress on you. Particularly, you should manage to repay your debt in your own way.

The bottom line

The repayment of the loans is as important as receiving the amount from the lenders. You have a full guarantee that you will repay the fund efficiently. Make a budget of finances and then try to repay the installments on time every month. This step will save you from facing a situation of a loan defaulter. Such defaulters bear the negative aspects of unpaid loans. The sentence to jail is also compulsory for them for up to 3 years.

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