Number of loan defaulters among OFWs in UAE goes up due to COVID-19 pandemic

DUBAI, United Arab Emirates - More people in Dubai, United Arab Emirates have been defaulting on their bank loans because of job loss, salary cuts or no-work-no-pay arrangements with their employers due to COVID-19.

Apparently noting the severity of the situation, Consul General Paul Raymund Cortes offered a glimmer of hope saying the reopening of Dubai’s economy following three months of strict anti-COVID-19 measures will “bring more confidence among Filipinos.”

“While many kababayans were indeed affected by the COVID-19 pandemic and the lockdown that ensued, the reopening of Dubai to international tourists is hoped to bring more confidence among the Filipinos in the country not just in Dubai's economy or the UAE's, but more so, a foreshadowing of how the global economy can take its cue from the UAE's strongest resolve to bounce back to the economic levels before the crisis,” Cortes told GMA News Online.

Hard-numbered statistics could not immediately be obtained from official sources, but Atty. Barney Almazar, 2015 Ten Outstanding Young Men (TOYM) awardee and director at Gulf Law Consultancy, told GMA News Online that their figure has increased by 100%.

“I don’t have the official statistics of the borrowers severely affected or could not pay due to COVID, but what I can confirm is that the numbers of defaulters have increased by 100% based on the number of inquiries and requests for assistance we were getting before and during the pandemic,” said Almazar, who also was recipient of the 2016 Asian Legal Business Young Lawyer of the Year for the Philippines.

He said 60% of their loan-related clients were Filipinos; the rest, Europeans and South Asians.

“As more companies are closing, we expect the number to grow,” Almazar, known in the Filipino community here for his advocacies toward overseas Filipino workers (OFWs), said.

Most loans that the law firm settles involve credit cards, according to the lawyer.

“We recommend to convert the card balances to a fixed-term loan so that interest will be lowered and they can pay at an agreed term,” Almazar said.

He said there also were OFWs with pending debts back home.

“Their loans have piled up since the tendency is to borrow to repay an existing loan. But they end up having so many loans that they can no longer manage,” Almazar said, adding that the debts range from Dh30,000 to Dh1 million for credit cards and personal loans. He said those paying mortgages back home have loans going as high as Dh5 million.

Indeed, said Almazar, the primary legal concern in the UAE are police and civil cases from unpaid loans, adding that the law firm last month had up to 200 inquiries and requests to help settle their loan obligations.

“They can ask for deferment of payments if they lost their job, salaries have been reduced, or they were on a no-work-no-pay set-up,” said Almazar.  A bounced cheque of more than Dh200k will merit a jail term, he said.

“The best solution is to negotiate with the banks, taking into consideration their personal circumstances and central bank regulations to strengthen their bargaining position. We can also use humanitarian grounds to get some concessions,” Almazar said.

Negotiating with the bank

Meanwhile, among OFWs in a bind due to loan problems is Andrea Humogan (not her real name) who is currently in talks with the bank to ease payments for her loans which totaled Dh312,000 that she obtained in 2014.

“We are trying to negotiate the amount,” said Humogan, marketing manager at a free zone garment factory before she lost her job.

“Sana mapababa pa ng bank at ma-reconsider ang situation ko since I’m jobless naman, naka-spouse visa lang ako at walang assurance ang work ng husband ko dahil non-stop ang layoff sa company nila,” Humogan said.

She said her debt consisted of a car loan and credit cards where Dh146,000 was for the automobile itself and the rest for other purchases using the plastic card.

“I was a marketing manager back then nang na-bankrupt ang company,” she said.

“I have paid the car, almost more than half, as well as the cards. But, unfortunately the bank was still insisting na napunta lang lahat sa interest ang binayad ko for almost two years dahil ganu'n daw talaga ang policy,” said Humogan.  

She said the police filed a case against her back in 2016. “Natapos ko ang police case, almost Dh40,000 ang naubos ko. Last year nag-file ng civil case ang bank,” Humogan said.

She said she represented herself at the hearings. “Nag-try akong mag-appeal but due to lack of finances, where I needed to hire a lawyer, ako lang humarap sa hearing. Unfortunately, I lost the case,” Humogan said.

The same thing happened on the second appeal, she said.

“In the end, the current status of my case is closed and they gave a final decision to pay the full Dh312,000,” said Humogan.

She said the credit card loans were used “para mapaikot lang din ang negosyo and not for any luxurious stuff.

“But, unfortunately hindi naging successful.”

SagipKabayan-UAE

Several overseas Filipino workers (OFWs) have meantime banded together under the group SagipKabayan which has embarked on a charity program for fellow OFWs heavily impacted by COVID-19.

Franz Ramirez-Angeles, a financial literacy advocate who is among those spearheading SagipKabayan-UAE, said over 500 OFWs in two batches have benefitted from their program. A sizeable number of those who benefitted were those locked in loan issues due to job loss or measures implemented by employers to cut on costs, like no-work-no-pay arrangements or reduced salary which are legally allowed.

“Madami po tayong mga kababayan na nawalan ng work. 'Yung iba naman no-work-no pay, ang nangangailangan ng tulong. Madami din po 'yong ang work nila ay sa schools, mga nasa cleaning companies. Marami din on visit visa na on job hunting. Sila 'yung mga ‘kasagip’ recipients of relief, usually food and other personal necessities. Sila po 'yong tinutulungan ng mga ‘Kabayani’ na nagdo-donate and coordinated by SagipKabayan-UAE,” Angeles said.

She said they have encountered a large number of OFWs through their program who have pending loan problems. “Marami sila,” Angeles said, adding however that they don’t go deeper into their recipient’s financial state for privacy reasons, which is why they don’t have actual figures listed.

“Actually, ang tinatanong lang namin sa kanila ay kung ano reason why they need help. We don’t go down to the information about their loan issues,” Angeles said.

Ben Lebig, Jr, also a financial literacy and OFW entrepreneurship advocate, meantime shared that despite the absence of actual numbers especially considering the fluidity of the current situation, it can be said that OFWs with loan problems can count to the hundreds.

“Most definitely. Majority pa nga…since kapag nawalan sila ng work, mas priority na ang basic needs like food and rent compared to loan repayments,” he said. —KG, GMA News