Debtor’s Rights in the United Arab Emirates is a delicate topic for debt collectors in the UAE. Debtors may not be familiar with the regulations governing debt collection in their native country, which can make debt recovery problematic. In this blog post, we’ll go over ten strategies for successfully recovering debts from debtors in the UAE.
Tip #1: Know your rights as a debtor in the United Arab Emirates.
Understanding the debtor’s rights in the UAE is the first step towards reclaiming your debts. Federal Law No. 18 of 1993 (the “Debt Collection Law”) governs the collection and enforcement of debts. From filing a demand letter to taking legal action against a debtor, this legislation covers all facets of debt recovery. It’s critical that you understand this law so that you can follow it effectively when collecting debts.
Tip #02: Before pursuing any legal action, send a demand letter.
It is required to submit a demand letter to a debtor before starting legal action against them, detailing the amount owing, the date the debt was incurred, and a request for payment. This letter should be sent by registered mail so that you can prove it was delivered to the debtor.
Tip #03: Hire a lawyer to assist with debt collection.
If you are unfamiliar with the Debt Collection Law or do not feel comfortable pursuing legal action against a debtor, you should hire a lawyer to help you recover your debts. The attorney will be able to walk you through the procedure and ensure that everything is done appropriately and in accordance with the law.
Tip #04: Collect all debt evidence.
It’s critical to have all of the essential evidence to establish that a debt is owed before sending a demand letter or starting legal action. This includes any original contracts or agreements signed by both parties, invoices and receipts, bank statements confirming payments made on behalf of the debtor, and records of money transfers between accounts.
Tip #05: Before commencing legal action, send an invoice with your last demand letter.
Prior to sending summonses from the court or hiring a bailiff, if you need to take legal action against a debtor to recover your debt (i.e., filing for bankruptcy), send them an official tax invoice showing how much they owe. The reason for this is that if you don’t send them an invoice first, their lawyer will argue that you didn’t intend to file the lawsuit in the first place and that you were merely harassing or embarrassing them.
Tip #06: Before pursuing legal action against a debtor, file for bankruptcy.
It’s crucial to assess whether any debts are covered by Dubai’s Debtor Protection Law while deciding how to proceed with debt collection (Federal Decree No. 16 of 2006). Some debts cannot be recovered using standard methods such as court summonses and/or bailiffs under this law. In these situations, filing for bankruptcy against your debtor through an official URA department is usually the best alternative – especially if their debt exceeds AED100k ($27k) at the time (the amount may increase soon).
Tip #07: Use a debt collecting agency
You can employ a debt collection agency to recover your debts if you don’t want to take legal action against a debtor or the debt is too little to justify engaging a lawyer. A professional debt collection service will have dealt with the Debt Collection Law before and will be able to assist you in recovering your funds without the inconvenience of taking legal action yourself.
Tip #08: Before seizing any assets from a debtor, get a court order.
Before seizing a debtor’s assets (such as bank accounts or cars), you must first obtain a court order specifying that these assets can be confiscated. This order should include a list of all assets that can be seized, as well as their respective values.
Tip #09: Hire a bailiff to take a debtor’s possessions.
If you obtain a court order that allows you to confiscate certain assets from a debtor, you can engage a bailiff to do it on your behalf. In order to satisfy the debt, the bailiff will seize the assets and sell them at auction.
Tip #10: Seek expert assistance if necessary.
If you are unfamiliar with the Debt Collection Law or need assistance recovering your debts, you should seek professional assistance. This could entail hiring a lawyer or enlisting the help of a debt collection firm. You will be able to ensure that everything is done according to the law and that you do not lose your case by doing so.
Tips: The infographic can be printed as a poster (which is also available separately) or used into a presentation. Please contact our Tasheel Debt Recovery Dept. if you have any additional queries about the UAE legal system. We are experts in all elements of domestic and international commercial litigation, debt recovery, and business conflict resolution, including UCC filings, collections, and enforcement. Please contact us right away for additional information on how we can assist you with your problem!
