It should be noted that in the United Arab Emirates, when a personal loan or credit card facility is granted to a borrower, banks or financial institutions may collect checks as collateral against the loan amount.
This is in addition to a signed personal loan agreement or a signed application form that contains terms and conditions.
Failure to pay three consecutive installments or six non-consecutive installments when repaying your personal loans or your credit card facilities may be considered a default event, in accordance with Article 4 (4) of the Personal Loan Agreement Coordination annexed to notice No. (3692/2012) from the Central Bank of the United Arab Emirates.
Article 4 (4) of the wording of the personal loan agreement, which was approved by the Central Bank of the United Arab Emirates, states the following: “The loan expires and all installments, interest, and any other fees and expenses become due and payable immediately without the need to give them any notification or any Judicial ruling and without prejudice to any other rights of the bank in accordance with this agreement or according to the law - in case the borrower fails to pay three consecutive installments or six non consecutive installments of the monthly installments without the bank’s approval. ”
Therefore, in the event of default, the bank or financial institution that benefited from personal loans or credit cards may choose to deposit a security check / check for collection. Then, if these security checks are not correct due to insufficient funds in your bank account, the bank or financial institution may file a criminal complaint against you.
It should be noted that the shamefulness of the check in the UAE is considered a criminal crime. In accordance with Article 401 of Federal Law No. (3) of 1987 regarding the issuance of the UAE Penal Code, which states: “Imprisonment or a fine shall be imposed on any person who, in bad faith, issues a draft (check). Without a sufficient balance and is subject to withdrawal or, after Giving a check by withdrawing all or part of the balance, which made the balance insufficient to settle the check, or if the drawee is asked not to cash a check or sign the check in a way that prevents it from being cashed.
When filing a criminal complaint, travel may be prohibited against you. You may not be allowed to travel outside the UAE if you fail to pay personal loans or credit card installments. If you fail to pay after leaving the United Arab Emirates, you may be detained upon re-entry into the country.
However, if the amount of your security check is less than 200,000 dirhams, the penalty may be a penalty, which may range from 2000 dirhams to 10,000 dirhams, depending on the amount of the check. Upon payment of this penalty, the travel ban may be lifted due to the bounced check.
Moreover, the lender or financial institution may file a civil lawsuit against you, based on the personal loan agreement you signed, to recover the outstanding debts. If you are outside the United Arab Emirates, they can apply to the court for your detention upon re-entry into the country.
Consult a legal practitioner in the UAE for more professional advice.
Know the law
Failure to pay three consecutive installments or six non-consecutive installments when paying off your personal loans or credit card facilities may be considered an event of default.