Questions & Answers
The possibility of facing a jail term in case of big loan default
Hi,
Could you please let me know what is the rule for cheque return that we give for our loan guarantee?
We took a loan one year ago for AED 770,000 and now we can not pay the instalments.
Our cheque is AED 1,200,000 and the bank deposited the cheque. They said they will open a case in Sharjah, and we don't know the cheque return rules in Sharjah.
My husband is out of the country now and he wants to come back, but we're afraid if they open the case in Sharjah as we heard that they keep the person in jail until returning the full amount.
Our loan was 4 years and the instalment was AED 25000. We paid 8 instalments. Now, the cheque returned and we don't know whether they've opened a case or no and if they opened what we should do.
Please advise me if it's better for my husband not to come back to the UAE or to Sharjah.
Also, will they fine him around AED 20000 without jail or they will keep him in jail.
Thanks and regards
Hi
The lack of sufficient funds in the bank account could ensure criminal proceedings against the drawer of cheques.
There are two forms of liabilities associated with dishonoured cheques in the UAE.
The first one is criminal by virtue of the provisions of Article 401 of the Penal Code, which lists 5 forms of violations that may lead to imprisonment and/or a fine.
Dishonoured cheques used to lead to imprisonment (usually of one to three months, but could reach up to 3 years) or a fine imposed upon any person who fails to honour a cheque or commits an act to avoid the payment of a cheque (this used to range between AED 1,000 to AED 30,000).
This was used by creditors as a significant element to pressurize debtors to settle the amount of the cheque to avoid imprisonment.
However, pursuant to Dubai Law No. 1 of 2017, the law was amended and now if the amount of the dishonoured cheque is less than AED 200,000, the drawer will not be imprisoned and will only be subject to a fine of not more than AED 10,000.
Once the said fine is paid, the debtor’s criminal liability would be terminated.
The second liability is commercial under the provisions of Article 599/2 of the UAE Federal Commercial Transaction Code, pursuant to which, the drawer of a cheque, or whoever orders another to draw it on his behalf, is obliged to deliver sufficient funds to pay such cheque.
We can check for you if the case is opened as of now or not. For this, you need to buy our service from this portal and we can provide the required service. After checking, we can advise you further on this.
