When you move outside of your native country you are said to be an expatriate of the country you are moving from.
Many UK citizens move to various places around the world, some for work, some just to escape our weather. And one of the places many Brits move off to is the UAE.
And we are not alone, as of 2010, only about 16% of the population in the UAE were Emirates.
Naturally when you move to another country you learn the laws and rules there, and also immerse yourself in the culture.
So for Brits who move to the UAE, this is no different, there is a learning curve, and this learning curve applies to banking and borrowing money as well.
Banking and Borrowing Money In The UAE
Just as you may take out a loan or a credit card and borrow money in the UK, moving to the UAE is no different.
The major difference is that should you default on the loan or credit card, it is a crime, and one that you can be imprisoned for.
The reason it is a crime is that when you take out the loan or credit card you guarantee a cheque to pay the loan each month. Should that cheque bounce, such as not having sufficient funds in the account, it is considered a crime. A crime in which you could find yourself with a police warrant issued against you, and possible jail time.
And as we will see, just moving away from the UAE does not always make the debt go away.
Leaving UAE Debts Behind
I spoke with and received emails from many people who moved from the UK to Dubai and the UAE, had good jobs, took out credit cards, bought a car on finance, some even bought property.
They subsequently lost their job, which caused them to lose their work permit or Visa to stay in the country. In addition, once they defaulted on any of the loans, the bank may have a warrant issued to arrest them.
For British ex-pats this is obviously a very scary situation. If we are to believe what we read, the jailing of ex-pats for bounced cheques has been overturned.
However, if you have no job, and you have debts to pay, why would you stay in the UAE.
The obvious thing to do is to leave/flee the country and come back to the UK, or move to another country.
However, can these UAE debts be collected or enforced in the UK?
The Collection of UAE Debt in The UK
Recently there seems to have been an increase in the number of people who had left debts in the UAE, moved back to the UK, and then were contacted by a UK firm of solicitors attempting to collect the debt.
My advice had been that unless the firm bought the debt, I did not see how a UAE debt or contract would be collected here in the UK. I also would state to them, I cannot provide legal advice, and also advised them to seek legal advice.
If the UAE debt, or any debt from another country, had been sold to a collection agency here in the UK, then yes it could be collected in accord with the laws here in the UK, and the borrower also had all the debt management and repayment options that are here in the UK.
They could consider a debt management plan, IVA, or even bankruptcy if need be.
With more and more people coming back to the UK and leaving debts in the UAE, we were seeing more and more of these collection notices, and people contacting us for advice.
Getting To The Bottom and The Facts
With an increase in UK citizens requesting advice on this matter, can a debt the left in the UAE really be collected, or enforced here in the UK, I decided to do a little investigating.
I phoned the solictors, Coyle White Devine, in question and spoke to a representative there and was informed that they did not own the debt(s), but were collecting the debts for the bank(s) in UAE.
When I asked if they had taken any of these cases to court and obtained a CCJ/County Court Judgment, the representative stated yes.
I asked how could an account that originated in the UAE be enforced and collected in the UK?
I was told that in the terms and conditions for these accounts there was a “non-exclusive UE jurisdiction“, which basically states the debts can be collected anywhere in the world.
I was also told that the firm does try to work with the debtor as best they can, and that yes, the debtor could do a DMP, IVA, or go bankrupt and include the account.
I was also informed that the statue of limitations on these debts is 15 years, not the six (6) years we have here in the UK.
If we are to believe what we have been told, old UAE originated accounts/debts, can and are being collected here in the UK.
But what options does the debtor have if UAE accounts/debts, can and are being collected here in the UK?
Debt Options For UAE Debt In The UK
If a debt that originated in the UAE is being collected here in the UK, the borrower has all the available debt options in the UK at their disposal. Even if the debt from the UAE or anywhere in the world, has yet to have attempts to collect it in the UK.
This means that if a UK citizen leaves a debt in any country, including the UAE, they can include it in a debt repayment scheme, or in an insolvency option, even if the borrower has yet to be chased for payment here in the UK, or the account/debt has yet to be collected here in the UK.
This includes placing the debt in a Debt Management Plan, IVA, bankruptcy, and DRO’s/ Debt Relief Order. However, there are some differences to keep in mind.
According to Gill Hankey of the Bankruptcy Advisory Service, “If the debtor’s centre of main interest is in England, a debt in Dubai/UAE may be included in their bankruptcy petition.”
If the debt is being chased by a UK agency, the borrower can just include them in an IVA or DMP, and payments go to them just as it does in an IVA or DMP as the debt is being chased here in the UK. (We need to keep in mind that a DMP/Debt Management Plan is an informal repayment arrangement, and not binding to a creditor or collector, where as an IVA is binding).
Even if a debt has yet to be chased here in the UK, and the debt originates from the UAE or elsewhere, it can be included in the IVA. There are provisions for the Insolvency Practitioner (IP) to send payment, in Sterling, to the UAE or other country’s bank. It is the bank’s responsibility to convert the Sterling to their currency.
UAE debts can as we know be included in bankruptcy, if they are being collected in the UK, and even if they are not being collected in the UK.
It must be noted that the protection afforded the debtor in an IVA or in bankruptcy, is only in the UK/EU. If the debtor were to return to the UAE or the country that the debt originated in, they could then be chased for the account, and face the full ramifications of that country’s collection process.
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In querying this with the government’s insolvency service their response was the following:
“All of your creditors in the world, except for taxes due to non-EU countries, are able to claim in a bankruptcy being conducted in this country.”
“There is a provision in insolvency law which prevents your creditors taking action against you in England and Wales while you are bankrupt.”
“Foreign creditors will, in practical terms, not be stopped from taking debt-recovery action against you in their own country, as the English court cannot restrict their activities abroad. However, if a foreign creditor does start debt-recovery action abroad, you should explain the position and the foreign court may stop the action in view of your bankruptcy. If not, the foreign creditor may try to recover his debt from any foreign assets which the trustee is unable to deal with.”
Mike Reeves, who has been an Insolvency Practitioner for 25 years, and is a member of the Insolvency Practitioners Association, and of the Association of Business Recovery Professionals (R3) stated regarding insolvency and foreign debts:
“There is no reason why a foreign creditor should not claim and receive payments out of an UK/EU insolvency (but with special rules for foreign tax claims ).” He went on to say, ““This is true whether or not the creditor has already been attempting to recover their claim in the UK/EU.”
Mike said, “So a foreign creditor will be bound by an UK/EU insolvency But they will only be bound in the EU.” Reeves went on to add, ““In other words that foreign creditor can still try to recover their claim outside the UK/EU.
For example a creditor outside the UK/EU could still go after a property or other assets situated outside the UK/EU.”
Mike Reeves added a cautionary warning, ““And if, after going through an UK/EU insolvency, the person or company owing the money returns abroad to where the foreign debt is claimed, the foreign creditor will be able to continue to try to recover their claim in whatever legal way they wish.”
So while being chased for a debt that originated in the UAE or any country for that matter, is not pleasant, depending on the individual’s circumstance, there are options available to work out a repayment plan based on what someone can afford, or be relieved of the debt entirely through insolvency measures.