New Law for Loan Defaulters in UAE 2024: What You Need to Know

The new law for loan defaulters in the UAE (2024) focuses on financial restructuring instead of imprisonment. While borrowers still face penalties such as travel bans, asset freezes, and wage deductions, most cases are now handled through settlement and insolvency proceedings rather than jail time. Criminal charges apply only if there is fraud, cheque misuse, or intentional hiding of assets.

Key Highlights of the 2024 Loan Defaulter Law in UAE

• Shift from Jail to Restructuring: Defaulting no longer automatically leads to imprisonment; instead, courts prioritize debt settlement.
• Travel Bans Remain: Defaulters may be restricted from leaving the UAE until debts are cleared.
• Asset Freezing: Banks can freeze accounts and seize assets through court order.
• Salary Deductions: Courts may order up to 25% of monthly income towards repayment.
• Personal Insolvency Law: Borrowers can apply for structured repayment plans through legal insolvency procedures.
• Bounced Cheques: Decriminalised in most cases, but still penalised with fines unless fraud is proven.

What Happens If You Default on a Loan in UAE?

• Financial Penalties: Additional fees and interest charges.
• Reduced Credit Score: Impacts ability to get future loans.
• Collection Agencies: Banks may appoint third parties to recover amounts.
• Civil Lawsuits: Courts may order salary cuts or seizure of assets.
• Criminal Cases (Exceptional): Only if fraud or deliberate hiding of funds is proven.

Borrower Rights Under the New Law

• Right to negotiate repayment plans with banks.
• Right to apply for insolvency protection to restructure debts.
• Right to early settlement discounts in some cases.
• Protection from unfair harassment by debt collectors.

FAQs on UAE Loan Defaulters Law 2024

Can I go to jail for not paying a loan in Dubai?
Not automatically. Jail is only possible in cases of fraud, fake documents, or criminal cheque misuse.

Will I get a travel ban if I default on a loan?
Yes, in many cases a travel ban applies until the debt is settled or restructured.

Can I file for bankruptcy in the UAE?
Yes, under the Personal Insolvency Law, individuals can file to legally restructure their debts.

What happens to my salary if I default?
Courts may deduct up to 25% of your income for repayment.

Note: Make sure double check the info with related authorities. above mention info may inaccurate