All You Need to Know About Debt Collectors in the UAE

debt

Did you know that debt recovery is a major issue all around the world? Time and again individuals have tried new methods to combat this problem. From mortgaging property to cases where the debtors fled or they didn’t have the property that could be mortgaged, it became more and more difficult to deal with this. Cases of fraud, identity theft, and delinquency became common and there was a need for professional agencies with qualified attorneys to step in and handle people in that specific jurisdiction.

Debt collectors were created to pursue debts on behalf of their clients and tried to recover the debts without a lot of legal involvement or court orders. If the collectors failed to do so, then the attorneys were required to take legal action to recover the debt. In such cases, agencies have to represent their clients in civil courts against individuals who refused to pay the debt. This ensured that the debt was recovered in a manner that was hassle-free for the client.

The types of debt recovery agencies

In any debt contract, there are two parties – the first party (lender) and the second party (debtor). Collection agencies are divided into the first- and third-party agencies.

  • The first party agency – This is a department of the lending company and it gets involved in the debt collection process early on. It tries to recover the debt for a few months and if they are unsuccessful, then the job is passed on to the third-party agency.
  • The third-party agency – This agency is not a part of the originally drawn debt contract, neither is it part of the first party agency. The third-party agency collects the debt at a fee which is a certain percentage charged depending on the stage the debt has gone. The longer and advanced the stage, the higher the commission. Most of the time when the entire debt has not been recovered the agency isn’t paid – they are paid only when the entire amount is recovered. This is called the ‘no collection fee’ and can mean that between 25 to 45% of the debt has been recovered.

Debt collection in UAE – how do they work?

Debt collectors in Dubai are called for help at a later stage when the debt cannot be recovered and the court summons the debtor and makes them repay their loans. The lending company depends on the first party agency for six months to recover the outstanding amount, failing which they issue notices to the debtor, and if unpaid still, the communication increases. Litigation lawyers in Dubai are contacted and used to extract money from the debtor – they track down the individual and analyse their assets and liabilities in detail. Here are a couple of methods used to recover debts.

  • Levies – If the debtor has a savings or current account in any bank, it’s frozen and they are given 21 days to pay back the amount. If the amount is not received then the money keeps getting debited from the account until there is nothing left. Any credit or debit cards are taken away by the bank.
  • Attachment – This works similarly to the security provided by the banks. In case the debtor has some kind of property like a house, land, vehicle, or any other kind of asset, this is seized to pay the debt. In some countries, though houses cannot be used to pay the debt if the house is in the debtors’ name. Laws can differ from country to country.
  • Wage garnishment – Another commonly used method by collectors to recover debt – and this can only be applied if the debtor has a job. The collection agency contacts the employer and the money is deducted from the paycheck of the debtor (including any financial benefits they may have received from the job)

In Conclusion

Debt collection UAE agencies are a ray of hope when it comes to lenders getting back their money. If your clients change their address, information, complain about the business, deny continued requests of asking for money, or even ignore legal documentation then it’s high time to hire a debt collection agency to help you out and save yourself any kind of hassle in the future.