Questions & Answers
Consequences of defaulting on a small amount of a bank loan
Hi,
Please advise me on the below issues!
I have taken a loan from a bank (AED 70,000) and suddenly I couldn't pay my loan due because I have some salary issues in my company.
They have deposited my security check and I have paid a fine amount of AED 5020 at the police station and I also have the slip which I received from them for payment of the fine.
After a few months, I joined a new company. The collection agency called me and advised me to pay the loan amount which is pending. I started paying my loan amount, but suddenly, I faced some financial issues so I couldn't pay the 2-month loan amount.
They sent me an email to pay the total outstanding amount of AED 19,000.
Will the collection agency file a civil case for that small amount?
I will clear my pending loan but I need some time. If they file a civil case, what will be the problem?
Can I travel outside the UAE?
Please advise me!
Dear Questioner,
You have paid the fine as per the legal order of 2017 and hence your criminal case is over. However, the bank reserve the right to file a civil case against you in UAE courts and recover the principal amount plus costs, etc.
Once the judgment is given against you, the bank can file execution and you may face arrest, travel ban, etc. till you pay the awarded amount and get NOC from the court.
However, this is also pertinent to mention that debt collection agencies normally do not file the civil case in courts without the written consent of the real claiming party.
So, in this context, you may be advised to approach the bank and request them to increase deadlines, since the balance amount is small, the bank will be more inclined to give you more time to return the amount instead of filing a case in court.
If you need more assistance, please feel free to contact us.
Shakeel A. Mian
Managing Partner
Prudential middle east legal consultants
