“Can I use credit insurance to pay off my loan after losing my job?” “

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I had been working in UAE for many years and returned to India for vacation two months ago. However, I was unable to return to the UAE due to travel restrictions related to the Covid-19 pandemic and subsequent flight bans.

I lost my job earlier this month due to my inability to return to the UAE and my residency visa has also expired in the meantime.

My problem is that I have a loan from a bank in UAE, 11.82 percent of which, or about Dh40,000, is yet to be repaid. I took out the loan in 2017 and the monthly payment is 8,023 Dh.

When my company cut our wages by 35% last year due to the pandemic, the bank gave me three months payment leave. When it ended, I resumed paying the full monthly payment even though my salary was still 35% lower than I normally received.

The bank also deducted an insurance payment against the loan each month. Does this mean that the outstanding amount is covered by loan insurance?

Unemployed and unable to return to UAE, am I still subject to legal action from the bank for non-repayment of the amount owed on the loan? I am 61 and finding another job at my age is very unlikely. Can you advise me on my legal situation? DD, India

Panelist on Debt 1: Philip King, Head of Retail Banking at Islamic Bank of Abu Dhabi

This is a naturally difficult situation to live with, especially with the wave of unplanned pay cuts and job losses resulting from the pandemic. We congratulate you on your commitment and continued efforts to repay your debt despite your difficult circumstances.

When it comes to your loan insurance, the first step is to check with your bank to see if the insurance policy covers involuntary job loss and for how long. If so, your insurance should support your monthly loan payments and protect you against default for a predetermined period. It would either pay the full monthly payment or a portion of it on your behalf, usually 12-24 months, as these insurance policies only provide short-term protection.

When you fail to make repayments, banks charge late payment fees. However, after three consecutive missed refunds and repeated warnings from your bank, they can file a complaint against you and request a travel ban, preventing you from returning to the UAE.

You should check with your bank for the terms and conditions of insurance on your loan.

Nathan McFarlane, Founder of AskHelpWith.com

That being said, we encourage you to continue your job search, whether in the UAE or abroad.

Generally, leaving the UAE without meeting your financial obligations shouldn’t be a problem if your bank is aware of your situation; There is no obligation for a borrower to maintain a residence in the UAE until their loans are fully repaid.

However, defaulting on your loans after leaving the country is a more serious problem compared to those that default while still in the country, and can lead to legal repercussions.

Living in debt can certainly be overwhelming and we strongly recommend that you keep your expenses as low as possible through careful budgeting or seek financial help during this difficult time.

Panelist on Debt 2: Nathan McFarlane, Founder of AskHelpWith.com

This is such an unfortunate situation to find oneself in and it is certainly a situation that many expats are currently facing due to the travel restrictions of Covid-19.

There are a few points to emphasize here, but let’s start with the insurance. It is likely that you purchased the insurance when you took out the loan and already have a copy of the policy terms in your loan agreement.

However, you should check with your bank to find out more about the terms and conditions of insurance on your loan. You may be eligible to make a claim depending on your situation as this type of insurance is normally used in the event of forced dismissal.

Whether or not you can use the insurance to pay off your loan largely defines your next question about whether your bank will take legal action against you for the missed loan payments.

If you are not covered by insurance and an amount is still owed to the bank, the bank can take steps to collect the amounts owed.

As always in these situations, I suggest that you inform the bank of your situation and stay in constant communication with them. Always do this in writing so that you have a record of the discussion.

When the unpaid amount is as low as you indicated, banks are less likely to take civil action to collect the unpaid amounts. However, this is not a guarantee and they can exercise their right to take legal action. If this is the case, then I advise you to seek legal advice to understand your rights.

What is more likely, however, is that the bank will want to settle the issue out of court and may offer you alternative options. In my experience, if you need to make a deal with the bank and you’re overseas, they tend to be much more open to flexible ways of paying off a loan. I wish you good luck.

Debt Panelist 3: Felicity Glover, Personal Finance Editor at The National

Unintentional job loss can be a distressing life event at the best of times, but the Covid-19 pandemic has made this problem worse for millions of people around the world who have been put on leave, have had their wages cut. or are now unemployed.

It doesn’t help that you are stuck in India and unable to return to UAE for the foreseeable future. However, it is important that you contact your bank as soon as possible to verify the terms of your loan insurance policy as there are usually delays in making a forced termination insurance claim. This usually happens within two to three months of losing your job.

You will also need proof of your job loss to make a claim – has your company provided you with an official letter confirming that you are no longer employed by them? Otherwise, I advise you to also contact them immediately to make the request.

If you miss more than three loan payments, your bank may take legal action against you, which is another reason why it’s important to start the claims process as early as possible to protect yourself against this.

It is important to note that credit card insurance or loan protection can be a contentious issue for consumers if the policy has been mis-sold and are unable to make a claim because it does not cover them. in the event of involuntary loss of employment. If this is your case, then you must request reimbursement of the monthly payments you have paid under the policy and file a formal complaint with your bank.

While ageism has long been a problem in the job market, I think it’s an outdated view now that remote working has become the norm. You shouldn’t give up looking for another job just because you’re 61. Many people – regardless of their age – have found a new goal and a new career during the pandemic thanks to the booming sector of remote jobs.

I am sure that your professional experience and skills can be used to earn a decent income online, allowing you to take back control of your personal finances. For remote jobs based in India, it’s worth checking out remoters, naukri.com and even, while fiverr offers freelance work opportunities around the world.

The Debt Panel is a weekly column designed to help readers tackle their debts more effectively. If you have a question for the panel, write to [email protected]

Update: July 21, 2021 6:52 am

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