What happens if you can't pay your loan or credit card in the UAE

If you miss a loan or credit card payment in the UAE, the lender can charge a late fee capped by the Central Bank, and the late payment shows on your credit report. The lender must write to you once a payment is more than 30 days overdue and send a formal arrears notice after 60 days. If arrears continue, it can take the debt to court.

Key takeaways

• Late fees are capped by the Central Bank: AED 230 on a credit card, AED 200 on a consumer loan, AED 500 on a car loan and AED 700 on a home loan, plus VAT.
• The lender must write to you once a payment is more than 30 days overdue and send a formal arrears notice once the arrears are more than 60 days old.
• A payment made more than 90 days late shows red on your AECB report, and missed payments stay on the report for up to 5 years, even after you settle.
• Since 2 January 2022, a cheque that bounces for lack of funds is a crime only in cases of bad faith or other cheque offences, but the holder can have it enforced directly through the court.
• Contact the lender in writing early: banks may defer up to two instalments a year, at their discretion.

The lender rules below are the Central Bank’s and apply to licensed banks and finance companies, conventional or Islamic; the credit report and court sections draw on the Etihad Credit Bureau, the Commercial Transactions Law and the Abu Dhabi Judicial Department. They cover what happens while you live in the UAE; for moving abroad, see leaving the UAE with debt, and for related topics, our Debt help guides.

Timeline of a missed payment

A missed payment moves through set stages: a possible late fee at the due date, written contact after 30 days, a formal notice after 60 days and, if nothing changes, collection and legal action. Most stages oblige the lender to tell you something in writing, so keep every letter, email and SMS.

Written notice after a missed payment

30 days

A lender must tell the consumer in writing straight away when a payment is more than 30 calendar days past due.

Formal arrears notice

60 days

When an account is more than 60 calendar days in arrears, the lender must send a written notice to the consumer and any guarantor with the arrears amount, fees, consequences and contact details, then monthly updates.

The 60-day notice must show when the account fell into arrears, the amount, the interest or profit rate, fees and who to contact. It must also list the consequences of continued non-payment, such as credit bureau reporting, set-off against your other accounts with the lender where your terms allow it, sale of collateral, demands on guarantors, legal proceedings and further interest and fees.

Before collection or court action, the lender must, as far as reasonably possible, discuss your difficulties with you and record the discussion.

Worked example

A missed personal loan instalment of AED 3,000

Amounts and dates are illustrations. The example follows only the March instalment and assumes later ones are paid on time.

1. The AED 3,000 instalment due on 1 March is not paid. The lender may add a late charge of at most AED 200, plus VAT: AED 3,000 + AED 200 = AED 3,200 owed on this instalment, before VAT and any further interest or fees.
2. From 1 April, 31 days after 1 March, the payment is more than 30 days past due: the lender must write to you and ask why.
3. From 1 May (31 + 30 = 61 days), the arrears are more than 60 days old: the formal arrears notice is due, then monthly updates.
4. A payment up to 90 days late shows yellow on the credit report. 31 + 30 + 29 = 90 days takes you to 30 May, so paying by 30 May keeps this month yellow; from 31 May it turns red.
5. If the April instalment had also been missed, 2 × AED 3,000 = AED 6,000 would be in arrears before late fees, and the lender must warn you in writing of the possible consequences.

Paying the AED 3,200, plus VAT and any further interest or fees due, by 30 May keeps this month yellow instead of red; either way, the late payment can stay on the report for up to 5 years.

Late fees: what the lender may charge

A lender may charge a late fee only up to the Central Bank’s cap for that product. The caps are maximums and are stated before UAE VAT, which is added on top.

Maximum late payment fee, credit card

AED 230

The late payment fee on a credit card is capped at AED 230.

Maximum late payment charge, consumer loan

AED 200

Delayed-payment penal interest charges on consumer loans are capped at AED 200.

Maximum late payment charge, car loan

AED 500

Late payment penal charges on a car loan are capped at AED 500.

Maximum late payment fee, home loan

AED 700

Late payment fees on a home loan are capped at AED 700.

The lender must disclose each late fee and the date it was charged, so ask for that breakdown if your statement is unclear. Fees are not the whole cost: the 60-day notice must warn you that interest and related fees keep accumulating while the arrears remain. How card interest builds up is explained in credit card interest and fees.

How missed payments show on your AECB report

Your Etihad Credit Bureau (AECB) report shows a colour-coded payment history for each loan and card, so any lender that checks it can see a late payment and how late it was.

Payment history on your credit report

Red = over 90 days late

Each facility on the report shows a 24-month colour grid: green for paid on or before the due date, yellow for paid up to 90 days late, red for paid more than 90 days late.

Settling the arrears does not erase late payments that are already on the report.

How long missed payments stay on your report

Up to 5 years

Defaults, missed payments and bounced cheques stay on the credit report for up to 5 years, even after the amount is settled.

A payment plan does not remove the history either: when you agree one, the lender must tell you that reporting on the arrears is shared with the credit bureau. To see what lenders see, check your AECB report. For buy now, pay later plans, see what happens if you miss a BNPL payment and BNPL and your credit report.

Collections: what lenders and agents may do

Lenders and their authorised collection agents may contact you about arrears only through approved channels, may call or visit only at set hours, and must not contact you excessively.

When collectors may contact you

9 AM to 8 PM

Lenders and their collection agents may phone or visit a consumer about arrears only between 9 AM and 8 PM.

Under the Central Bank’s Consumer Protection Standards:

• Channels. Email, registered mail, courier, SMS, phone calls, or another method you agree to.
• Calls. Attempts must not be excessive. If you are not reached, the caller should leave a message with a number you can call back.
• Identification. Each contact must name the lender and its collection department or agent, with a contact number and working hours; callers give their own name.
• Visits. No visits to your home or workplace without your express consent or a court order.
• Privacy. No sharing of your information with third parties, your employer included, except the credit bureau, an authorised collection agent, where the law requires it or where you consent.
• Agents. If the lender appoints a third party to collect, it must tell you who it is, the amount it is collecting and what it is authorised to do, including taking payments.

A lender can also sell or transfer the debt, but not without warning.

Notice before your debt is sold

60 days

If a lender sells or transfers a consumer's credit product to a third party, it must tell the consumer in writing 60 calendar days in advance and name the third party.

If a lender or agent breaks these rules, note the dates, times and numbers, then complain to the bank and Sanadak. The rules on debt collectors will get a fuller guide of their own.

Can you go to jail for unpaid debt?

Not for a cheque that bounces only because your account is short: since 2 January 2022, a cheque returned for insufficient funds is a crime in the UAE only in cases of bad faith or other cheque offences, which still carry prison terms. This matters to borrowers because Central Bank rules let banks and finance companies take post-dated cheques covering a loan’s instalments.

Bounced cheques decriminalised

2 Jan 2022

From 2 January 2022, Federal Decree-Law No. 14 of 2020 narrowed criminal liability for cheques returned for insufficient funds to cases of bad faith and other cheque crimes, and made partial payment of cheques mandatory.

What remains a crime under Article 675 of the Commercial Transactions Law is acting to stop a cheque being paid:

• telling the bank not to pay your cheque in cases the law does not allow;
• closing the account, withdrawing the whole balance, or deliberately getting the account frozen;
• writing or signing a cheque on purpose so that it cannot be cashed.

Penalty for bad-faith cheque offences

6 months to 2 years

Telling the bank not to pay your own cheque in cases the law does not allow, closing or emptying the account, deliberately getting it frozen, or writing a cheque so it cannot be cashed remains a crime: 6 months to 2 years in prison and/or a fine of at least 10% of the cheque value (minimum AED 5,000) up to double the value.

The full rules, including partial payment and security cheques, are in bounced cheques after the 2022 reforms.

For the unpaid instalments themselves, the possible consequences a lender must warn you about once 2 payments are in arrears include legal action, foreclosure, redemption of security, a demand on the guarantor and negative credit bureau reporting.

Court action and enforcement

If arrears continue, the lender can go to court for a judgment and then ask the court to enforce it. A security cheque gives it a faster route.

The cheque route. A cheque the bank marks as unpaid for insufficient or no balance is an executive document under Article 667 of the Commercial Transactions Law: the holder can ask the execution court to enforce it, in whole or in part, without first filing a lawsuit. Partial payment is also mandatory: if your account holds less than the cheque amount, your bank must pay what is there, unless the holder refuses.

The judgment route. The Abu Dhabi Judicial Department describes the stages: the case is registered, prepared and heard, a judgment is issued, it may be appealed, and the creditor then opens an enforcement file. Courts in other emirates publish their own procedures.

What an enforcement file can ask for

Seizure, salary, travel ban

Once a judgment is enforceable, the creditor's enforcement file can include requests to seize bank accounts or property, impose a salary deduction, or impose a travel ban.

In Abu Dhabi, you can ask the enforcement judge to allow instalments or a postponement, with supporting evidence, and a notarised settlement agreement can close the file. For a home loan, the lender must warn you that you may still owe money after the property is repossessed and sold. Travel bans for debt are a separate topic: see travel bans for debt.

What to do as soon as you know you cannot pay

Contact the lender in writing, ideally before the payment is missed. Lenders must offer qualified credit counselling and give reasonable consideration to alternative arrangements when you approach them.

Talk to the lender in writing

Write through the lender’s app, online banking or official email, and keep copies. Say what has changed, such as a job loss or a salary cut, what you can pay each month and what you are asking for. Each lender’s website must have a debt management section with contacts for its arrears staff and the fees that may be charged on accounts in arrears. If you want someone to deal with the lender for you, the lender must work with them once you ask and consent. See your rights as a borrower for the wider rules.

Deferral and restructuring

A deferral postpones one or more instalments, at the bank’s choice.

Instalment deferrals

2 a year

Banks may defer up to two instalments in a year, at their discretion.

If you agree a new arrangement, such as lower payments for a period, the lender must confirm it in writing with a new schedule.

Written terms for a revised arrangement

10 business days

When a lender agrees a revised repayment arrangement with a consumer, it must give the consumer, within 10 complete business days, a written explanation of the arrangement, a revised payment schedule and a breakdown of how payments will be allocated, and must tell the consumer that reporting on the arrears is shared with the credit bureau.

If the lender rejects your offer, it must tell you why in writing. A full settlement or restructuring is a bigger step, covered in negotiating with your bank.

Consolidating debts

Consolidation means taking one new loan to repay several. Your total repayments must still fit within the Central Bank’s debt burden ratio cap, and the rules bar top-ups, deferrals or rescheduling beyond your eligibility on salary multiple, tenor and repayment percentage, as well as rolling loans over to disguise problem loans.

Consolidation has its own trade-offs, covered in debt consolidation in the UAE. If a lender breaks the rules above, you can complain to the bank and Sanadak.