With widespread job losses, slashed salaries and reduced business revenue, the COVID-19 crisis has left many foreign workers and small business owners in the UAE reeling from the financial fallout of the pandemic.

While a percentage of expatriates aim to ride out the storm, many others are now forced to leave the country due to uncertain job and economic outlooks. But for those with outstanding debts, leaving the UAE whilst owing money can be a daunting prospect.

Small business owner Michelle Kuehn knows all too well how the pandemic can quickly impact livelihoods. Two years ago, Kuehn set up her homegrown fitness company, Real Boxing Only, in Dubai. Then the coronavirus pandemic hit.

“Gyms were closed for nearly three months, and during that time we earned zero income,” she said. “I have received no support for my business and fell behind with my bills by Dh250,000.”

It has, she says, felt like “the absolute kick in the teeth” during an already difficult spell. “The biggest issue I am facing now is rent; if I were to fulfil my contract, I will be out of business within the next three months. That is being optimistic. I have requested rent relief for the three months closed but have not received any from my landlord.”

While Kuehn, who has called the UAE home for 25 years, does not plan to leave, her financial position is by no means unique. And many do want to return to their home country before they rack up any more debt in the UAE.


Barney Almazar, a director at the corporate-commercial department of Gulf Law, said that more people are finding themselves in debt in the UAE due to the COVID-19 crisis.

“Just this month, I received more than 200 inquiries and requests for assistance due to no work; no pay; salary reduction [by] as much as 70 per cent, as businesses are not yet open or working on reduced hours; and termination,” he said.

Almazar has personally seen an increase in the number of residents who are contemplating leaving the UAE, especially those in the hotel, airline and education sectors, due to debt and difficulty securing new employment.

“Finding a new employer is difficult since the layoff is industry-wide,” he said. “Some banks have given loan repayment breaks or deferments of up to three months. We also see cases where landlords have delayed or reduced rent payments. However, the worry of the majority is finding a continuous source of income. What will happen after the grace period?”


However, Almazar said, those who are now looking to return home have options for leaving whilst in debt.

“There is no requirement for the borrower to maintain a residence in the UAE while their loans are not yet fully paid. In fact, the immigration will allow them to exit the country as long as no [police] cases or travel ban has been put against them. Payments can be made while they are outside of the UAE.”

What is crucial, he noted, is communication with banks. “Those with salary loans: banks will freeze their end-of-service as a matter of practice. Borrowers can unfreeze it once they have updated the bank with their new employer details. If they wish to return to their home country for good, my recommendation is to appoint a representative based in the UAE who can transact on their behalf. They should execute a power of attorney before leaving the country. Or, at the very least, leave an authorisation letter so that their representative can negotiate the settlement of their loans.”

He continued: “It is important [for them] to clear their obligations even if they have already left the country, not only legally, but also morally. Banks can enforce collection even if they are back in their home country or another jurisdiction, especially within the GCC.”

Almazar says that the good news is that banks are “not in the business of sending their customers to jail” so long as you have the “good faith intention to honour your obligations”.

Taronish Mistry of BSA Ahmad Bin Hezeem & Associates, also advises that those seeking to return to their home country while in debt should try to reach an agreement with their bank.

“Debts can be settled remotely; however, the bank should know your plans,” he said. “Interest rates and some other terms might have to be changed. It is important to know what the new terms are so you can plan accordingly. Seeking repayment breaks while job seeking and/or moving back will provide some breathing room, as will asking the bank to change the repayment structure to only interest repayments in the short term, with the principal to be paid at a later date.”

He added, “Remember that the bank should receive regular repayments leading to eventually paying off the debt or settling it, [rather] than having the borrower completely unable to pay due to unsustainable payments in the short-term.”

Mistry said a prudent way to deal with debt is to carefully plan and manage repayments. “Seeking help from specialists, even at a cost, can often be an investment, as they could help you settle your debts for far less than you owe.”

He noted that the UAE has taken steps to introduce more flexibility in the repayment of loans, such as the 100 billion dirhams stimulus announced by the UAE Central Bank in March 2020 to aid banks in helping their affected customers.

“Those impacted financially by COVID-19 should reach out to their banks and seek the relevant repayment breaks as needed. Banks have been assessing requests on a case-by-case basis, so it is important to provide as compelling a case as possible and seek any specialist help if needed.”

(Reporting by Jennifer Bell, editing by Seban Scaria)



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