What happens if you default on a loan in the UAE?
Loan default happens after a loan is left unpaid for a certain period of time. In the UAE, in the case of default, the lender may choose to deposit the borrower’s security cheque(s) for collection, according to Ashish Mehta, founder and Managing Partner of Ashish Mehta associates.
Should the said security cheques be dishonored due to insufficiency of funds, the lender may file an execution case against the borrower in accordance with provisions of Federal Decree-Law No. 14 of 2020.
In the execution case, upon completion of 15 days from the date of notifying the borrower, the lender may commence the relevant procedures against the borrower, which may include a request to impose a travel ban on them. The court may approve such a request, said Mehta.
Alternatively, for speedy remedy, the lender may approach the court if the outstanding amount is more than 10,000 dirhams and request the imposition of a travel ban on the borrower in accordance with Article 188 of Cabinet Resolution 33 of 2020.
Additionally, the lender may have the option of filing a payment order case or a civil case against the borrower in court to recover the outstanding debt. If the final judgment is not in the borrower’s favor, the lender may proceed to file execution proceedings against the borrower and that may include a request to impose a travel ban on them.
Moreover, Mehta said that the borrower may approach the lender or the Dubai Police or Dubai Courts to check if they have any travel ban imposed on them.