The early age for first period is associated with many factors such as higher socio-economic status, obesity, nutritional status and general health
Question: I work in a Dubai-based firm and my job doesn't look too steady at the moment. I have availed of two loans: One is a personal one, and the other is car finance. I have about four years to go before the loans are paid back. Can you please advise what the legal proceedings against me will be if I lose my job and am unable to pay back the loans?
Response: Pursuant to your queries, the provisions of Notice No. 3692/2012 of Central Bank of the UAE pertaining to General Terms & Conditions and Loan Agreements texts drafted and approved by Emirates Bank Association (the ‘Loan Agreements Formats Approved by Central Bank of UAE’); Resolution of the Cabinet No. 33 of 2020 Amending Certain Provisions of Resolution of the Cabinet No. 57 of 2018 on the Regulations of the Federal Law No. 11 of 1992 on the Civil Procedure Code (the ‘Cabinet Resolution No. 33 of 2020); and Resolution of the Cabinet No. 75 of 2021 Amending Certain Provisions of Resolution of the Cabinet No. 33 of 2020 on the Regulations of the Federal Law No. 11 of 1992 on the Civil Procedure Code (the ‘Cabinet Resolution No. 75 of 2021’) are applicable.
It should be noted that in the UAE, when a personal or a car loan facility is granted to a borrower, the lender may collect cheque/s as security against the loan amount. This is in addition to a signed loan agreement or a signed application form which contains the terms and conditions.
An individual failing to pay three consecutive instalments or six non-consecutive ones on the repayment of personal loans may be considered as an event of default. This is in accordance with Article 4(4) of the Personal Loan Agreement format of Loan Agreements Formats Approved by Central Bank of UAE, which states: "The loan elapses and all the instalments, interests and any other fees and expenses become due and payable immediately without having to give any notification or any court ruling and without prejudice to any other rights of the bank according to this agreement or in accordance with the law - in the event that the borrower failed to pay three consecutive instalments or six non-consecutive instalments of the monthly instalments without approval of the bank."
For car loans, an individual needs to provide an undertaking to the lender stating that in the event of a default in repayment of instalments, the car may be seized and auctioned. If the auction proceeds are less than the car loan due, the borrower shall be responsible to pay the remaining balance along with all expenses, fees pertaining to seizure and auction. This is in accordance with 4(4) of the Auto Loan Agreement format of Loan Agreements Formats Approved by Central Bank of UAE.
An individual failing to pay three consecutive instalments or six non-consecutive ones on the repayment of the car loans may be considered an event of default.
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Therefore, in case of a default of personal loan and/or car loan, the lender may choose to deposit your security cheque(s) for collection. Should the said security cheques be dishonoured due to insufficiency of funds, the lender may file a payment order case against you in accordance with Cabinet Resolution 33 of 2020 and Cabinet Resolution No. 75 of 2021.
Based on the payment order case judgement, the lender may commence execution proceedings against you if you do not file an appeal within 15 days of judgement.
Additionally, the lender may file a civil case against you in a court to recover the outstanding debt.
Ashish Mehta is the founder and Managing Partner of Ashish Mehta & Associates. He is qualified to practise law in Dubai, the United Kingdom, Singapore, and India. Full details of his firm on: www.amalawyers.com. Readers may e-mail their questions to: news@khaleejtimes.com or send them to Legal View, Khaleej Times, PO Box 11243, Dubai.
The early age for first period is associated with many factors such as higher socio-economic status, obesity, nutritional status and general health
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