Negotiating with your bank: restructuring and debt settlement

If you cannot keep up with repayments, you can ask your bank to defer instalments, restructure the loan or accept a settlement. Central Bank rules require lenders to offer credit counselling and consider alternative arrangements, but the terms are the lender’s decision. An agreed arrangement must be confirmed in writing within 10 business days, and missed payments stay on your credit report for up to 5 years.

Key takeaways

• Lenders must give reasonable consideration to alternative arrangements and designate a credit counsellor if you ask.
• Banks may defer up to two instalments a year, at their discretion.
• An agreed arrangement must be confirmed in writing within 10 complete business days, with a revised schedule.
• If the bank rejects your repayment offer, it must explain why in writing.
• Settling does not wipe your credit report: missed payments stay for up to 5 years.

The lender rules below apply to licensed banks and finance companies, conventional and Islamic. For the stages of a missed payment, see what happens after missed payments; for moving abroad, leaving the UAE with debt; for more, our Debt help guides.

Your options: deferral, restructuring, settlement

You can ask for a pause (deferral), new terms (restructuring), an agreed amount that closes the debt (settlement), or one loan that repays several (consolidation). The lender decides, within the Central Bank limits in the table.

Deferring instalments

A deferral moves one or two instalments later, so it suits a short drop in income.

Instalment deferrals

2 a year

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

A deferral must not push your future salary deductions above the debt burden ratio limit. Ask in writing how interest on the deferred instalments is charged.

Restructuring or rescheduling a loan

Restructuring, which the Central Bank’s guidance mostly calls rescheduling, changes the instalment, the term or both. It may not go beyond your eligibility in terms of salary multiple, tenor and repayment percentage, banks should have a policy that restricts how often they reschedule, and loans must not be “ever-greened” to disguise problem or delinquent loans.

For a personal loan, the 48-month maximum tenor normally caps the new term; the guidance allows a longer period only in exceptional circumstances.

Rescheduling beyond 48 months

Beyond 48 months, exceptionally

In exceptional circumstances, such as rescheduling because the borrower retires or loses income for another reason, a personal loan may be given a repayment period longer than 48 months.

If the new term runs past your retirement, the schedule must keep deductions from that point within a lower limit.

Deductions after retirement

30%

If a loan's repayment period runs past the borrower's retirement, the lender must schedule it so that deductions from that point do not exceed 30% of income or pension.

A longer term lowers the instalment but usually raises the total interest.

Worked example

Rescheduling AED 48,000 left on a personal loan

All figures are illustrations, at a reducing rate of 8% a year. 12 of the original 36 instalments are paid.

1. Today: AED 48,000 is left over 24 instalments of AED 2,170.91. Interest still to pay: 24 × AED 2,170.91 = AED 52,101.84, less AED 48,000 = AED 4,101.84.
2. Rescheduled over 36 months from now: 12 + 36 = 48 months in total, within the 48-month limit. The new instalment is AED 1,504.15.
3. Monthly saving: AED 2,170.91 less AED 1,504.15 = AED 666.76.
4. Interest still to pay: 36 × AED 1,504.1455 (the instalment before rounding to the fil) = AED 54,149.24, less AED 48,000 = AED 6,149.24.
5. Extra interest: AED 6,149.24 less AED 4,101.84 = AED 2,047.40.

Rescheduling cuts the instalment by AED 666.76 a month but adds AED 2,047.40 of interest.

If the bank agrees, it must send the revised schedule in writing within 10 business days. A deferral of up to two instalments a year is the smaller alternative.

Settling for a lump sum

A settlement closes the debt for an agreed amount, sometimes less than the full balance. Lenders must consider alternative arrangements, but no Central Bank rule requires a discount or sets a process for one, so the amount is a negotiation. Paying the full balance early is early settlement, with a capped fee: see early settlement of a personal loan and the early settlement calculator.

Consolidating your debts

Consolidation replaces several debts with one new loan or a card balance transfer. Repayments must still fit within the debt burden ratio cap, and a longer term can cost more overall. See debt consolidation and credit card balance transfers.

What your bank must do when you are struggling

Your lender must offer qualified credit counselling, consider alternative arrangements when you approach it and, as far as reasonably possible, discuss your difficulties before it starts collection or legal action.

Credit counsellor on request

Counsellor on request

Lenders must monitor and identify borrowers who have difficulty servicing their debt, designate a credit counsellor to help them manage it when they ask, and tell delinquent borrowers that qualified credit counsellors are available.

Under the Central Bank’s Consumer Protection Regulation and Standards, lenders must also:

• Step in early when payment irregularities first appear.
• Talk before acting: where reasonably possible, discuss your difficulties before collection, enforcing collateral or guarantees, or going to court, and document those talks.
• Work with your representative: discuss ways to resolve the arrears with you or a representative you authorise, once you ask and consent.
• Publish a debt management page, linked prominently from the homepage, with contacts for arrears and counselling staff, the fees on accounts in arrears and budgeting tools.
• Avoid pressure: have clear standards and procedures that prohibit undue and coercive pressure when collecting debts.

The rules do not say whether counselling is free, so ask. For the wider rules, see your rights as a borrower.

How to ask: step by step

Ask in writing, early, with a specific offer you can afford and evidence of what changed.

1. Get the exact balance: a redemption statement showing what clears the loan today, and a liability letter listing everything you owe the lender.
2. Work out what you can pay each month after essential costs.
3. Find the arrears or counselling contact in the debt management section of the lender’s website.
4. Write with your reasons, evidence and a specific offer (checklist below).
5. Ask for a credit counsellor.
6. Use a representative if you want one; once you are in arrears, the lender must deal with someone you authorise if you ask and consent.
7. Keep copies of letters, emails, reference numbers and the names of people you speak to.

Redemption statement fee, consumer loans

AED 25

For consumer loans, the fee for other services such as a copy of the loan, a redemption statement or an audit confirmation is capped at AED 25.

What to put in a settlement or restructuring letter. A clear letter, including one asking to settle a credit card, covers:

• your name, contact details and account or card numbers;
• what changed and when, such as a job loss or salary cut, with evidence such as a termination letter;
• your monthly income, essential costs and other debts;
• a specific request: named instalments to defer, a new instalment over a stated term, or a lump sum in full and final settlement with the date you can pay;
• a request for the agreed terms in writing.

Get it in writing

Do not rely on a phone agreement: a revised plan must be confirmed in writing, and a settlement needs written terms before you pay.

For a revised repayment plan

Written terms for a revised plan

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.

Check the instalment, the number of payments and the end date against what you agreed. If the lender rejects your offer, it must record its reasons and explain the rejection to you in writing.

For a settlement

Before you pay, get written confirmation that names the accounts, states the amount accepted in full settlement and the payment date, and confirms nothing more will be owed. After you pay, ask for a no-liability letter.

Liability and no-liability letters

7 business days

A consumer can ask the lender at any time for written confirmation of whether any liabilities are owed; the lender must issue a letter of no liability, or, if something is still owed, a letter of liability with the details and amounts, within 7 complete business days of the request.

Ask for your post-dated or security cheques back; when a loan is paid off early, the rules set a deadline.

Return of post-dated cheques

7 business days

When a loan or financing is paid off early, the institution must return the remaining post-dated cheques to the consumer within 7 complete business days of the payoff.

For a credit card, ask for the card to be closed as part of the settlement; cancelling a credit card covers clearance letters.

Credit card closure

45 days

A bank must close a credit card account within 45 calendar days of the request and confirm it in writing, unless a balance is still outstanding; the card should be frozen once closure is requested.

If a court case or travel ban already exists

A settlement should also end the court process. In Abu Dhabi, an enforcement file can be closed on a notarised settlement agreement, and a debtor can ask the enforcement judge for instalments or a postponement, with evidence. Under Article 325 of the federal Civil Procedure Law, the judge must lift a debt travel ban if, among other grounds, the creditor agrees in writing, so ask for that consent as part of the deal. See travel bans for debt. Courts in other emirates publish their own procedures.

How restructuring and settlement show on your AECB report

Neither removes your history: late payments already reported stay on your Etihad Credit Bureau (AECB) report after you settle.

How long missed payments stay

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.

When you agree a revised plan, the lender must tell you that reporting on your arrears is shared with the bureau. The report covers closed facilities as well as active ones; reading your AECB report explains its payment grid.

The bureau’s FAQs do not say how an account settled for less, or restructured, is labelled. Ask the lender how it will report the account, then check your AECB report once the deal is done, and ask for a correction if something is wrong.

Correcting your credit report

Free

Data correction is free for any credit report bought in the last 30 days; the bureau passes the request to the information provider, and the report should be updated within 10 working days.

Debt settlement companies

You can negotiate with a UAE lender directly, and the rules already give you:

• a credit counsellor designated by the lender at your request;
• arrears and counselling contacts on the lender’s debt management page;
• dealings on arrears through a representative you authorise;
• a free complaint to Sanadak, where the Central Bank directs consumers with complaints about licensed financial institutions.

If you pay an adviser or firm, ask in writing what they charge, what they will do and what happens if the lender says no. Keep paying the lender directly unless it confirms another arrangement in writing.

If talks fail

If you think the lender has not treated you fairly, complain to it first and then to Sanadak. If arrears continue, the lender can take the debt to court.

Before you go to Sanadak

15 calendar days

Sanadak may reject a complaint if the consumer did not first complain formally to the bank or insurer, or did not wait 15 calendar days after raising it there.

See complain to the bank and Sanadak for the steps. In Abu Dhabi, once a judgment is enforceable, the creditor’s enforcement file can ask for seizure of accounts or property, a salary deduction or a travel ban; what happens after missed payments has the full sequence.

Insolvency for individuals

3-year settlement plan

Federal Decree-Law No. 19 of 2019 on Insolvency covers individuals who cannot pay their debts: the court appoints one or more experts who work with the debtor and the creditors on a plan to settle the debts within three years.

Under this law, court-appointed experts work with you and your creditors on a plan to settle the debts within three years. Who can apply, and on what conditions, is set in the law itself, so check them with the court or a lawyer first; a guide on personal insolvency is planned.

You may also read about government debt relief funds. We have not found an official page showing any such fund open to applications now, so confirm with the official body before counting on one.