Consequences of unpaid loans in UAE

UAE banks approve of a loan after a complete assessment and verification. If you plan your finances well, defaulting should never happen. But life is unpredictable and there might be an unusual situation that may lead to default or delinquency of your debt. It may also happen if you do not take installment payments seriously or lax with the repayment.

Consequences of unpaid loans in UAE

Unlike many other countries where unpaid loans are filed under civil law, UAE considers it to be a criminal offense. Getting a loan from a bank or financial institution in UAE requires you to pay it back as per the agreed agreement and unpaid loans may put you in difficult legal situations.

There are three situations to look upon:

  • Not in a position to pay, but intend to pay back.
  • Not in a position to pay, and do not intend to pay back/ abscond
  • In a position to pay, but do not intend to/ fraud

In all the cases, firstly, the bank executives try to approach you directly for making the payment for your unpaid loans in UAE. In case you still do not pay or respond, they deposit your security cheques submitted at the time of loan application. If it is cleared, good, however in case it bounces due to insufficient funds in your account, it is immediately reported to police authorities and a case is filed against you.


  • You become a defaulter: The lending bank reports one to the police and immigration
  • A police case in your name: Once your cheque is bounced, then a police case is filed against you. Should this person enter or pass through a UAE airport anytime in the future, there is a fair chance of being apprehended. Maybe even other GCC countries.
  • Credit Score goes for a toss: in the future, many financial institutions won’t lend you money. Also, you will be debarred from applying for any credit facilities from the banks. Delinquency is reported to UAE’s credit agency ‘Al Etihad Credit Bureau’ and Central Bank in UAE.


Generally, we believe no one takes a loan with the intent to default. Sometimes, there are situations that make things tough financially. It can be a job loss (voluntary or involuntary), might be your earnings have reduced which makes you incapable to pay your bank installments as it may take a large piece from it. Whatever be the case, if your intent is clean, the best thing to do is to reach out to your bank. If this is an involuntary job loss situation, read the loan documents carefully and check if you have the insurance. As, in this case, your insurance pays the minimum due for a period defined in the document or until you get a new job, whichever is first. In any other situation, notify your bank and explain your situation. Request for an adjustment in your payment plan keeping in mind your paying capacity in the present situation. You can also add a co-borrower. Remember, the bank checks all your background, financial history, location, and credit history before taking any decision. If the option provided by the bank does not meet your requirements, there are rational & feasible options to settle debts.

What if you leave the country with unpaid loans and never return?    

UAE law is well regulated and followed. It is less likely that you can leave the country having a loan/debt or a police case in your name. However, even if somehow you manage to flee you will be a debtor in the eyes of the UAE government. Your credit score gets badly hit. Bank may assign the case to a collection agency from where you may receive calls for payments of your dues. In the last few years, there are many expatriates who have fled Dubai or UAE because they were unable to repay their debt. Certain provisions have been made for defaulting borrowers to re-enter the country in an easy manner, so long as they repay their existing debt with the banks.

Banks mostly welcome settlements made in good faith. They aren’t willing to put anyone behind bars. Talk to them; discuss your situation with valid reasons for your request for a new payment option or settlement. Negotiate over time and a payment plan that is manageable for you. Live a debt-free life.

Published by: UAE Cash Loans Team

Published Date: 3rd May 2020