Comprehensive Guide for Credit Card Debt Settlement in the UAE

By Pratima Singh
  | Published: 24 May 2021
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It is quite remarkable to witness the growth of UAE from a small country to a bustling modern-day business hub that is home to almost every corporate firm and company from the world in the Middle-East. With evolving infrastructure, job opportunities, and quality of life more and more people started migrating to the UAE in the search for better remuneration.

As a result, UAE is home to more than 80% of expats that reside, work and contribute to the growth of the country’s economy. Several expats who’ve recently migrated to the UAE or the ones looking for easy credit opt for credit cards and use them irresponsibly which leads to the accumulation of debts.

Unstable financial situations, loss of a job, personal issues are some of the common reasons that do not allow users to make timely repayments. The primary consequence is that the user gets stuck in a debt trap as the interest keeps on adding over the basic amount making it even more difficult to repay the outstanding financial obligation.

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Now, the question arises what should be done in such a situation? What is the right approach that will prevent the user from sinking deeper into the debt trap? Credit card debt settlement is a realistic and appropriate solution that will help the debtor to escape the debt trap the right way. If you are struggling with repayment of credit card debt or might end up in a similar situation, this thread will help you to get rid of your outstanding financial obligation in the right way.

Understanding Credit Card Debt Settlement in UAE

Credit cards are one of the most commonly used financial tools in today’s era and so are outstanding financial obligations. Credit card providers offer credit with the objective of earning profit in the form of interest. However, when credit companies realize that the user is unable to make the payment of the debt, they agree to settle the liability to retrieve the base amount. Undoubtedly, this would not help them to earn money but at the same time will prevent them from losing money.

It can be said that the credit card debt settlement turns out to be a no loss no gain situation for the users. This approach is useful for the cardholder as well as the credit card provider/financial institution.

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Credit Card Debt Settlement Options in UAE

There are several ways in which the user can settle their outstanding financial obligations with the bank or credit card provider, depending upon the debt. In this section, we will shed light on some of the most common ways in which credit card/providers and banks settle the outstanding debts of cardholders.

Lump-Sum Payment

This one of those methods of credit card debt settlement to which banks agree quite easily. However, an important point to be kept in consideration is that this approach works only if the debtor has the repayment amount in the form of cash to make the payment. You can simply reach out to the bank or credit card provider and request for settlement in the form of lump-sum followed by discussing the amount to be paid. This approach is quite effective as it helps the debtor to get rid of the debt quickly by making a one-time payment.

Agreement

This is one of the most preferred and common forms of debt settlement both by the bank and debtors. In the case of the agreement, the bank/credit card provider might agree to waive off your interest or lower the total debt or waive off the late fee so that it becomes easier for the debtor to make the payment. As a result, it would become easier for the users to repay the debt in the form of installments over a period of time.

Adversity Payment Settlement

If you’ve been unable to make the payment of your credit card debts due to hardships or adversities then this option might turn out to be suitable for you. For instance, if you are unable to make the payment due to loss of job, illness, disability, or any other personal issue you can contact your credit card provider with proper proofs depicting your issue.

Considering your problem the provider might reduce the minimum payment or waive off the interest to make it easier for the debtor to make the payment. The agreement approaches might vary from bank to bank and hence it is always advisable to contact your credit card provider/bank.

The Right way to Settle Credit Card Debts

If you are unable to repay your outstanding credit card debts and want to negotiate them, you need to follow a flowchart and proceed in order. In the very first place, you need to make a phone call as soon as possible and inform your provider about the problem. This might require multiple sessions with different levels.

Instead of calling the credit card provider without facts and figure do your homework and then proceed for the settlement. Jot down the entire numerical figures i.e. the exact amount that you owe, the rate of interest, the repayment tenor, sum of credit amount, and interest rate.

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A very common mistake made by a lot of debtors is that they start running from the bank/ credit card provider instead of approaching them which makes the problem worse instead of solving it. The best way is to directly contact your credit card provider and inform them that you want to settle the outstanding obligations. This way the bank will be able to recover a portion of the debt if not the entire amount.

There is a high probability that the first conversation might not go as planned but this does not mean that you give up on the efforts. It takes time for both parties to understand each other’s perspectives and come to terms with each other. A vital point that will help you to make the process easier is documenting everything right from the time you’ve opted for credit to the time of settlement.

If the bank agrees to proceed with the settlement make sure you get the entire discussion in writing to avoid any hassle later.

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In a Nutshell

Being caught in a situation where you are unable to pay your outstanding debts turns out to be depressing and frustrating but it is not a dead end. With the right knowledge and efforts, you can get over the burden of debt and live a peaceful and debt-free life. Make sure you inform your credit card provider about the entire situation, they might not agree to settle but it’s never harmful to discuss and put in the effort to solve your problems.

 

Pratima Singh
Pratima Singh10 Posts

Editor | This is me saying HEY! from behind the screen you're staring into. I am a pop culture junkie who derives pleasure in writing fresh, informative, and fun content.