Dubai: When Rajeev (name changed) borrowed Dh17,500 from a Dubai-based lender in 2012, little did he know he would face the prospect of landing in jail over a Dh100,000 bounced cheque three years later.
Only last month, a representative of Rajeev’s lender threatened to file a case against him if he failed to settle his outstanding dues worth more than Dh50,000. The outstanding balance was actually for a credit card that came automatically with Rajeev’s personal loan.
“You are accordingly instructed to repay the entire outstanding along with accrued interest and charges before [March 3, 2015]. Your failure to settle the loan by the date specified above will compel us to take suitable action against you,” a letter sent to Rajeev by Hadal Al Khaleej Debt Collection reads.
Back in February 2012, the expatriate from India who has two children and a jobless wife to support on a Dh5,000 monthly salary, applied for a personal loan from Dunia for Dh17,500. As part of the deal, Rajeev had to sign a security blank cheque and was issued a credit card with a Dh100,000 initial debt limit.
Rajeev swore that he had not missed any dues and managed to pay back more than the principal amount of the loan, having spent a little over Dh24,000 on monthly repayments between 2013 and 2014.
His trouble began when he started relying on his credit card in February 2013, which was about the same time he lost his job and his family stayed with him in Dubai, and made the habit of paying only the minimum monthly dues.
“When I lost my job in February 2013, my family was with me until April. [They already left but] I was alone until July without any income. I have to manage my family for food, medical, housing rent, my children’s education here. I have used my credit card during this period and repay minimum dues monthly without fail,” he said.
Although he later found another job, Rajeev was struggling to get by and sustain his family’s needs. He later missed two credit card payments on October and November 2014, and that’s when things got out of hand. Consequently, his credit card dues, which carried a 3.4 per cent monthly interest, ballooned to Dh51,000 by December.
The lender used the post-dated cheque that Rajeev had signed when he applied for the personal loan and wrote Dh100,000 on it to cover the initial credit limit on his card. Since the expatriate barely had any money in the bank, the cheque bounced.
“They have misused my security blank cheque and deposited it in the bank for Dh100,000 when my outstanding balance is [a little over Dh51,000],” said Rajeev.
Running out of options to settle his mounting debt, and scared of the prospect of doing some jail time, a desperate Rajeev pleaded for his lender to convert his credit card dues into a loan and not charge him any interest, but without success.
On February 14, according to Rajeev, the lender finally agreed to convert the credit card dues into a loan, but with an annual interest of 40 per cent per annum. The expat objected to the new terms because it was beyond his capacity to pay, and decided instead to stop paying the minimum dues, claiming that the lender “misused” his security cheque.
Unfortunately, the more he ignored the lender, the bigger his debt became. By the beginning of the year, his debt crept up further and reached more than Dh56,000 early this month.
“I have visited the lender several times to solve the problem, but no one understands my salary problem. [I’m unable to pay under the new terms] because I am getting less salary from my current company,” said Rajeev.
When reached for comment, a spokesperson for Dunia said the lender is “not in a position to share specific details” about Rajeev’s case because it is “constrained” by its “customer confidentiality and Central Bank rules and regulations.”
The lender, however, agreed a few days later to settle the borrower’s debt, which already reached Dh56,544 by March 11, without interest for 24 installments.
“We have provided a payment plan to the customer in line with his specific request,” Dunia said in a statement sent to Gulf News.
“We are happy to confirm that [the borrower] visited our office this morning, he is happy with our solution and the matter is satisfactorily resolved with our customer,” the company said.
Rajeev said he now has peace of mind and is thankful that he can concentrate on his work. And if there is only one thing he learned from his experience, it is that borrowers should avoid getting credit cards from lending firms.
“I have learned more things in this incident and [would like to inform] other [people] not to get credit cards from the private financial companies. Also, the government authorities [should be informed] about the private financial companies’ credit card policies, high interest charges, misuse of the security cheques and their collection team harassment,” he said.
“More people are suffering and [are unable] to go to their home country and see their family [because of their mounting debt]. I hope the government will look into this matter seriously and implement strict rules.”
Explaining why it had used Rajeev’s security cheque and charged more than the outstanding balance, the lender said in a letter sent to Rajeev that the borrower failed to pay the delinquent dues “despite repeated reminders.” Any excess of the amount charged “would be refunded after collecting legitimate dues.”
“Since the amount outstanding on a card can vary over time up to the credit limit granted, the post-dated cheque amount is always filled for an amount equivalent to the approved limit for all clients – which was Dh100,000 in your case,” the lender said.
In its statement sent to Gulf News, the lender maintained that it “constantly” works towards “enhancing value” to its customers and that it is committed “to the highest standards of governance, transparency and to the principles of treating customers fairly and of responsible lending.”
“We are always customer focused, and work towards facilitating customer transactions in the best possible manner,” Dunia said.
It said it has invested in facilitating its customers’ ability to approach the lender at any point in time through its contact centre at 04-4238642, through Dunia Online at www.dunia.ae or by emailing at customerservices@dunia.ae.
Customers can also walk into any of the lender’s 19 “financial centres.” “We also have invested in statement generating capabilities and a collection assistance unit to remind mour customers proactively on a monthly basis to be able to make timely payments, in order not to incur any late charges.”
“We also provide an interest-free period up to 50 days for any spend on the card for customers choosing to pay the amount fully before the next payment due date. All calls, in-bound or out-bound, to our contact centre or collections unit are recorded for client history and records, as well as for quality assurance process.”
