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Debt Collection in Dubai

Debt Collection in Dubai

There are situations in which companies must verify the payments made by their clients or partners and, in some cases, debt collection is necessary for Dubai companies. Our lawyers in Dubai are specialized in debt collection and they are ready to offer you full debt collection services for companies and individuals. We mention that our advisors will use the appropriate debt recovery methods in order for you to negotiate with the debtor and get back your money. We can also support you with the collection of remaining payments and to help you with the follow-up procedures.

Legislation governing debt recovery in Dubai

Debt collection falls under strict regulations in the UAE and most procedures are based on Sharia law. The Islamic law provides for a variety of methods for collecting unpaid debts. However, there are also civil and corporate laws that cover the process of debt collection in Dubai.

The Commercial Transactions Law is one of the main legal tools used in the UAE for collecting debt. The power to bring a lawsuit in court is one of the remedies provided by this law for creditors looking to recover unpaid debts. There are several laws that regulate debt collection in Dubai in addition to the Commercial Transactions Law, including:

  • the Civil Transactions Law: it provides legal remedies for debt collection as well as setting the duties and rights of creditors and debtors;
  • the UAE Penal Code: the Penal Code covers the criminal sanctions on debtors who refuse to pay their debts or give their creditors false information;
  • the UAE Commercial Transactions Law: it regulates commercial debt collection and offers additional legal options for debt collection.

Apart from these, there are also the regulations imposed by the Central Bank and the Ministry of Economic Development that offer legal remedies in debt recovery procedures in Dubai.  The National Bank has released various rules and directives pertaining to debt collection procedures. These cover the usage of credit reporting agencies, laws governing debt collection firms, and equitable debt collection methods.

The Ministry of Economy has also released rules governing debt collection procedures, such as instructions for using electronic payment methods and rules for resolving disputes between creditors and debtors.

Is it legal to start the recovery procedure through a debt collection agency in Dubai? Yes, however, it is advisable to address a law firm in Dubai once the amicable procedures no longer work.

We are also at your disposal with immigration services, if you want to apply for a freelance visa for Dubai.

The meaning of debt in short details

A borrowed sum of money which is not returned in time as stipulated by an agreement in this sense, signed by a company (the creditor) and the debtor, is called debt. This is the case where our Dubai attorneys can offer complete assistance and support when initiating the debt collection process.

How is debt collection procedure made in Dubai?

When entering into debt collection proceedings in Dubai, the debtor needs to know that they can communicate effectively in order to resolve any existing problem and be able to negotiate the payment methods. The following steps are part of the recovery procedure in Dubai:

  • debt collection begins with the amicable approach in which the debtor receives a notice for payment;
  • the next step consists of a phone call from our debt collection agents;
  • an open communication will be maintained between the creditor and the debtor throughout the procedure for a proper recovery; 
  • our team of advisors will act in compliance with the law so that companies receive their money back;
  • we will try to solve any recovery through amicable procedures, in order to avoid lawsuits.

We will need complete information about the debtor, in order to make a complete and correct evaluation of the situation in which the debt arose. We will try to persuade the debtor to make the payment, however, if they fail to respond, usually within the 60 days-time limit, we will commence the legal actions for debt recovery.

Is debt collection procedure in Dubai complex?

In most cases, debt collection can be an easy procedure if an agreement in this sense is accepted by both parts: the creditor and the debtor. If the terms are not respected, then a court will settle the following steps in recovering the money or assets.

What forms of debts can be met in Dubai?

Loans, rental payments, or cheques can be subject to debt collection in Dubai. We remind that any financial obligation made to a company in Dubai needs to be respected in accordance. Our Dubai lawyer is at your disposal if your company needs to recover credits or any related financial obligations.

Judicial proceedings in debt collection in Dubai

If an amicable agreement cannot be reached you can also file a petition with a Dubai court in order to recover any outstanding debt. It must be taken into account that Dubai does not have courts specialized in commercial litigation, therefore, you will have to file your petition with the relevant local court. The first step of the procedure consists in the Dubai court notifying the debtor through a registered demand letter which requires them to pay the amount and the late payment fees within 15 days. If the debtor does not pay, a trial can be commenced, stage in which the proceeding will be conducted in writing, as oral hearings are not possible in civil cases tried in Dubai. The remedies issued by the court usually consist in compensatory damages.

Amicable debt collection in Dubai

Just like in other countries, debt recovery in Dubai will start with an amicable procedure, or better said, with the creditor trying to retrieve any outstanding amount of money as soon as possible.

Amicable debt collection implies getting in touch with an accredited debt collection agency in Dubai and having it settle the case. Here is how the procedure is completed:

  • the agency will try to reach the debtor a few times via different channels;
  • these channels can be phone, conventional and electronic mail;
  • in most cases, a proposal on the means through which the debt can be extinguished are offered in the attempt of reaching an agreement.

If a mutual satisfactory agreement is reached, that will be the end of the debt collection process.

When using the services of an agency, one must make sure it is accredited by the UAE Central Bank.

Another option is to get in touch with our Dubai lawyers for support in debt collection, especially when it comes to commercial-related debts.

Our law firm is also at the service of people who want to move to the UAE through the Dubai freelance visa.

Debt collection statutes of limitation in Dubai

When using the services of a debt collection agency in Dubai or trying to recover outstanding amount of money any other way, it is important to consider the following time frames for starting the action:

  • for civil cases, the statutes of limitation range from 1 to 3 years, depending on the type of debt;
  • for commercial cases, the limitation to file a claim is 3 years;
  • the longest time available to start the debt chasing procedures is 15 years for certain types of contracts.

Paying debt before a legal execution

It is definitely unpleasant to deal with the debt collection procedures in case of unpaid bills or contracts. Our debt collection agents in Dubai are here to offer the possibility of paying the debts in a rapid and advantageous manner, in order to skip the formalities related to an execution in the court of law. Each case is unique and companies or natural persons involved in a debt collection procedure should seek immediate legal assistance and support. 

Sale of debts – what you need to know

Particular cases of debt collection might involve the sale of a specific share of the debt to another company called debt buyer or factor. Such company can buy debts and account for a certain percentage of the debt value and then pursuing the debtor for full balance, in agreement with the initial agreement or contract. It is a known fact that in the case of debts sale, the creditor receives direct revenues, although they are reduced compared to the value of the debt. In this situation, the debt buyer or the factor takes or receives the risks of the debt collection. Let our lawyers in Dubai tell you more about the debt collection procedures and about the ways in which companies can recover the payments.

Collection practices in Dubai

Debt collection agencies are at the disposal of foreign and local companies that are interested in recovering specific payments. The legislation specifies that agencies can locate debtors by getting in touch with other individuals or companies if it is the case, keeping information about debts in complete confidentiality. In case of deceased persons, the debt collection might involve the sale of properties or assets, without having to consider that the relatives are the next in line to make such payments. There are also situations of debts abroad which need to be recovered in Dubai. It is important to know that our debt collection specialists in Dubai will contact foreign parties and agencies and agree on the financial recovery methods with no complex formalities.

FAQ about debt collection

When is debt collection needed in Dubai?

Full debt collection services are provided at the time companies want to recover specific payments from partners, clients or other collaborators. Such procedures are normally conducted by a debt collection agency or specialists in this field. Our attorneys in Dubai are at your service if you are interested in the legal recovery methods involving the debt collection.

What is the starting point for debt collection?

A debt collection procedure starts with a payment notice, an amicable method followed by a phone call made by our specialists. The procedure is based on an open communication and a complete connection between the debtor and the creditor in Dubai. If companies from abroad are involved, the foreign legislation needs to be observed in such cases.

Is debt recovery method a legal procedure in Dubai?

Yes, all the recovery methods are made in accordance with the applicable legislation in the UAE. There are many companies or natural persons interested in the legal advice of a team of lawyers in Dubai who can provide information, instructions and guidelines when a debt collection procedure takes place. Let us remind you that our specialists in debt collection in Dubai are at your service at any time, whether you are a representative of a foreign company or not.

Is a debt evaluation made in the first place?

Yes, a debt collection agency in Dubai will, first of all, talk to the creditors and then will make a plan and a strategy to recover the debts. The amicable procedures are in most cases recommended.

Can I avoid a lawsuit in a debt recovery case?

Yes, instead of dealing with the proceedings of a debt collection case in the court of law, a debt collection agency will provide information about the amicable procedure in your case. Debt collection procedures are not that complex, especially if both parties involved decide on new terms and payment conditions, with complete legal support offered by our team of attorneys in Dubai.

As it is known, lawsuits take time and money, among other things, therefore, with the complete support from our team of advisors, your company can rapidly recover the payments from clients or partners, under new conditions if are needed. Moreover, there is a limit of 60 days until the case goes in the court of law, in front of the authorities. All the financial obligations of a firm can be effortlessly recuperated if companies decide on the support provided by specialists in this domain, the debt recovery agencies in Dubai.

Debt collection services available in Dubai

Our Dubai law firm can help you recover any existing debts and will also support you to verify any ongoing payments from customers or partners and repossess any recovered assets. 

Please feel free to contact our law firm in Dubai, if you are in need of debt collection services in Dubai.