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The Road Back To UAE

Clearing bad debts a second chance for the runaway borrowersclearing bad debts

This is probably the time when we can see the road to UAE for the runaway borrowers opening. Way back in 2009, when the global economy fell into a recession, a significant number of expatriates who racked up huge debts running into several hundreds and thousands of dirhams, absconded without repaying their banks or lenders. A lot of these expatriates now want to return to the UAE, to seek business or employment opportunities.

Many of them still face the risk of getting arrested even while they fly to other countries, by way of quick stopover at UAE airports or traveling with connection flights through UAE or some other unexpected ways.

“It is actually easier to arrange for ‘waiver of interests and penalties’ if the defaulter is outside the UAE as there is no ‘immediate threat of arrest or imprisonment’. However, settling debts should not just be the concern for returning expats. Even if one chooses not to go back to the UAE, it is still advisable to clear all debt as the law can reach the defaulters in many ways.”

The doors are still open for them to come back and start their expatriate life again – “Without landing behind bars.”

The Laws, Rules and regulations of the land are now more flexible to accommodate them.

Recovery or Execution in home country.

credit card

Normally, the Banks can pursue the claim in the expat’s home country or in places where the borrower has assets to cover for the unpaid liability. A judgment from the UAE Courts for a debt is enforceable in a debtor’s home country subject to the bilateral treaties are in place with the UAE for the enforcement of judgments.

Once the UAE court has issued the decision, the UAE police may only execute the decision within the country. Thus, the bank would request the debtor’s home country court to execute the judgement of the UAE courts. Such procedure is known as the recognition of foreign judgment. Once the home country local court has recognized the foreign judgement, the local police therein will be able to execute the decision against the debtor.

Creditors can also obtain a “money judgment” from the Dubai International Financial Centre (DIFC) courts that can be enforced overseas. This is applicable to countries that have forged a memorandum of understanding with the DIFC courts for “mutual recognition and enforcement of monetary judgments.” These jurisdictions include England and Wales, Singapore, New South Wales (Australia) and China.

Appointment of Legal Representative     

Legal Representative

By appointing a legal representative shall, double check the status of borrower/defaulter, can represent and negotiate on their behalf.

Negotiating with the banks


Since the main priority of the banks to get back their money, they are open to negotiate and settle the issues with the borrowers for onetime payment or to fix up with any other payment options. Therefore, if a borrower has unpaid debt, the bank can waive the fines and penalties and bring it down to any lower amount with new installment plans and schedules which the borrower is able to repay. In most cases, the bank or lender will ask the borrower to pay the settlement amount in full.

Agreement in written form


Once a verbal understanding has been reached on negotiation, a settlement letter in writing to be obtained from the bank in order to ensure that the bank has approved the waiver of penalties or reduction of outstanding balance before making any payment to the bank,

It is advised that under any circumstances, the borrower should not hand over the money if there is no written understanding. The letter is a document for the protection of the borrower, as it prohibits the bank from making different payment claims beyond the agreed amount. This letter should be obtained in all cases whether, there is any case, police complaint or arrest warrant is pending or not.

In the absence of such letter, there may be chances for the bank to disregard the understanding, reasoning that the said understanding is not approved by the management, or the officer who made the understanding could have left the bank or might have been transferred to another department etc.  In such cases, the borrower will find it difficult to prove the agreement with the bank and the borrower may have compelled to pay more money or go for other payment options.

Demand for clearance / release letter.

Once the payment has been made, the borrower should obtain the clearance/ release letter from the bank. The bank can issue the clearance letter on the same or following days. The clearance letter will serve as proof that the borrower has settled all dues with the creditor and the bank has withdrawn its complaint against the borrower. The said letter is required to get withdrawal of any cases which is pending before the police or the courts.

Police clearance certificate 

Once the instituted case has been cleared, the travel ban or blocking in the system will be removed on request, and then the borrower shall be able to enter the UAE without any difficulties.

Important notes to the borrowers:

  1. Defaulters must check whether there is a police complaint or arrest warrant against them.
  2. Defaulters should avoid travel to or make a quick stopover at UAE airports. Passengers with connections flights through UAE face the risk of getting arrested
  3. Negotiate with the bank/lender in order to lift any police complaint or arrest warrant.
  4. Borrowers must ensure that the creditor will issue a settlement letter before making payments.
  5. The main goal of the absconding expat is to have all the cases and police complaints have been lifted first and the police and immigration records have been wiped clean.
  6. Thus, once borrowers secure all the documents, and upon returning, they should carry all the documents in hand.



About the Author:  

Mohammed Sharafudheen, Advocate.


Mohammed Sharafudheen, Advocate. 

(Managing Director)

Legal Maxims Consultants. Dubai

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