Studies have shown that nearly half of the UAE residents are still in debts. Most of these debts are taken but are not paid on time. This brings about the process of debt collection; companies recruit debt collection firms that can help recover all the overdue payments from the debtors. Debt collection in the UAE is considered to be a challenging task.
Debt Collection – Settling the Debt
- There are many UAE residents that cannot afford to repay their debts, settling the debt helps such individuals to get out of their debts and refrain from going bankrupt.
- Settling the debt is a mutually agreed process of negotiations, where both the parties, the creditors and the debtors come together for negotiations and try to reduce the amount of the overdue debt.
- It is beneficial to appoint a lawyer in such situations that specializes in Alternate Dispute Resolution (ADR). The convincing power of a lawyer can help improve your stance during the negotiations.
- It is uncommon for creditors to accept such process of debt collection as they would not want to lose out on their money that the debtor owed to them.
- However, some creditors do agree to negotiate for debt collection out of personal reasons, the need for the fund, or merely out of frustration.
- If both the parties are ready for the negotiations, the debtor should have a valid reason for the creditor to be convinced and accept a lower amount.
Also Read: Quick Guide on Bankruptcy Law and restructuring Debts
Tips for Negotiation to Settle the Debt
- Be Aware of the Debt– The debtor should be aware of the debt that he owes to the creditor and be certain on whether it is his debt.
- If It is not your Debt– Prior to the negotiations, a notice will be sent claiming that the debtor owes an overdue debt to the creditor. The debtor can reply to the notice within 30 days of receiving the notice, asking for a proof of the overdue debt. Once you receive the proof and know that the debt does exist, you can continue with negotiations.
- Genuine Reason to Settle the Debt – The debtor must have a genuine and convincing reason for why he wants to settle the debt. This reason can help him get a better say in the negotiations
- Understand if the Creditor has any Reason to Agree for Less – Many times the creditor requires urgent funds or has some personal reasons for which he would want to conclude the case, and he may be open to accepting less than what the debtor owes to him. Usually, if the debt is really old, the debtor has more convincing power to persuade the creditor to accept less than the amount due to him.
- Make a Realistic Offer to Settle the Debt – The debtor can offer to settle the debt by paying a lump sum amount. Have a clear image of how much you can pay to settle this debt without damaging other more important commitments such as necessities.
- Offer to Settle in Installments – If the creditor is not willing to accept how much you can pay in lump sum, the debtor can offer to settle the debt in 2 or 3 installments.
- Counteroffer – Usually, creditors tend to bring a counteroffer. The debtor should quote a lump sum amount keeping enough space to accommodate for a counteroffer later.
- Get it in Writing – It is essential to get the agreed terms in writing. This ensures that you do not owe any more money to the creditor in the future.
Also Read: Insolvency Law: What Debtors can Do to Settle Outstanding Debt
The process of negotiation for debt collection is a complex task for many people. It is best to appoint a UAE lawyer that can work efficiently in getting a good deal out of the settlement. A lawyer can help advise you if there are any better solutions and accordingly make the negotiation process run smoothly.