A new insolvency law has been approved by the UAE Cabinet this week to protect debtors’ dignity and gives them the opportunity to manage their finances. On Tuesday, the ministry of finance explained how the law will be applied; how debtors can settle their debts and what will be the documents they will need to submit.
The Insolvency Law of Natural is known as the ‘insolvency of the natural person’ this addresses debtors inability to pay their debts due to bankruptcy and debt default. As per this law debtors are granted a reasonable period of time to fulfil their financial obligations. However, this is done provided that such a delay does not cause consequential harm to the creditor.
The insolvency law is for natural person who is not engaged in an economic activity and is not a trader. However, the primary purpose of both bankruptcy and Insolvency laws is the same: Both aims to protect the common interests of the creditor and the debtor in a fair and balanced manner. The risk is divided between them in such a way so as to ease the debtors from the cycle of financial difficulties and enable them to pay off their debt which has been accumulated.
This new law will strengthen the economic stability of the nation and makes a secure environment for personal loans to the contentment of both the creditor and the debtor. The law provides the necessary balance to guarantee the rights of creditors and debtors.