Cabinet of UAE approved a federal law to control cases of insolvency of natural persons, to enhance the competitiveness of the UAE to ensure the ease of doing business, creating appropriate conditions for individuals facing financial problems and protecting those who are unable to pay their debts from becoming bankrupt.
This federal law is to protect Emiratis and residents in debt from legal prosecution and decriminalises their financial obligations, to give them an opportunity to work to remove themselves from debt and support their families.
The law will come into effect from January 2020 and will help debtors settle their financial responsibilities through a court appointed expert. The expert will co-ordinate between the debtor and creditors to come up with a plan, lasting no longer than three-years, to settle the financial liabilities. During this period, the debtor will be prohibited from taking any loans till the court decides upon the request of the expert, the debtor or any of the creditors that the debt has been settled. The law helps reschedule their debts and provide them with the opportunity to be granted new concessional loans.
The law targets to enhance the creditworthiness of the UAE and, in the long run, its future growth prospective. It also aims to boost the keenness and strength of its economy by ensuring an environment that encourages entrepreneurship.
“The law essentially gives some hand-holding for individuals and assures them that there is no need to cross the coast. I will say this is fantastic news.” said Ashish Mehtha a leading lawyer.