New UAE insolvency law for individuals will come into effect in 2020
The United Arab Emirates government has announced that the country has passed a new law to protect the rights of people that are unable to repay their debts, in a move that further strengthens the financial sector in the country. The law will come into force in January 2020.
With the new law in place, Emiratis and residents in debt are protected from legal prosecution as it decriminalises their financial obligations, instead offering them an opportunity to work to repay their debts and continue to support the people that depend on them. This allows the Emiratis as well as the expat residents to continue their lives without having to leave the country or be prosecuted.
Of course, the debt still has to be repaid. For this, a court-appointed expert will help and coordinate with the person in debt, as well as the creditors, in order to come up with a repayment plan that should not last longer than three years. During the duration of the repayment, the debtor will not be able to take out any additional loans, unless the court has decided that the debt has been repaid in accordance with the agreement between the expert, debtor and creditor(s).
Speaking about the passing of the new law, Abdulaziz Al Ghurair, chairman of the UAE Banks Federation, told the National, “As the UAE advances its positioning as a regional economic hub and financial safe haven, regulations too will evolve to support the financial well-being and stability of local entrepreneurs and business owners. [...] The regulation will undoubtedly prove mutually beneficial to both the business community and the banking sector.”
With the new law in place, more individuals will be able to help the growth of the United Arab Emirates, contributing positively to the economy. Moreover, the country aims to improve its creditworthiness as well by increasing the competitiveness and strength of the entire economy compared to other countries in the region and the world. As one of the main financial hubs in the region already, the country is again looking to take the forefront by passing such legislation.
We believe that this development comes at the right time for the United Arab Emirates in order to allow sustainable growth of the country’s economy moving into the next decade and beyond. With this new law in place, more individuals will be able to overcome a temporary setback to then provide for their families and the overall growth of the economy again, which will certainly help bolster the country’s financial system.