UAE Insolvency Law | Financial Settlement for Residents

UAE Insolvency law, insolvency application, insolvency file, bankruptcy law in uae

There are thousands of debtors inside and outside UAE facing difficult time of their life due to financial inability. If you are one of them no need to worry more as UAE Cabinet approved a new Insolvency law through which a non-payer (defaulter/debtor) can seek help to pay the dues, not only this the debtor can avoid criminal prosecution too.

UAE Insolvency Law:

As per UAE Cabinet announcement, the new federal law named “insolvency” starting January 2020. This new insolvency law in UAE will protect individual debtors from prosecution (criminal law), decriminalize or accept the financial obligations of debtor and allow them to work and live in UAE either individually or with family.

Insolvency Meaning:

A person or a company who are unable to pay the debts on time will be known as insolvent. In more clear words insolvency is the legal term which describes the financial situation of the debtor who is unable to pay his/her debts to the person, company or government.

What Includes in Insolvency Law:

·       It will support residents who are facing current or upcoming financial difficulties.

·       Allow debtors to live and work freely.

·       It will protect defaulters from legal prosecution.

·       It provides 3 years plan to settle financial obligations.

·       Debtors can file an application to court for the settlement opportunities.

·       Absconders with unsettled debts can also apply through legal representative.

In simple words this law provides two options to deal with the personal insolvency:

1.     Through the possibility of settling financial obligations.
2.     Through insolvency and liquidation of funds.

So, if the debtor is/were unable to settle debts on time, he/she can submit an application to the court for the settlement of their financial liabilities with easy procedures and assistance through one or more insolvency experts under court’s supervision till the end of proceedings.

How a debtor can settle financial obligations?

If you are a debtor and wanted to settle your financial liabilities to a person or company you shall advance to the court and request opening of a file (the procedures) for settlement.

This is only applicable if you are an insolvent or it is proved that you do not have money and assets to pay debts in accordance with the provisions of the insolvency law.

Required Documents for Insolvency Application:

1.     An English or Arabic letter with a brief description about debtor financial position including source of income inside and outside UAE with current professional (work/job) status.

2.     Creditor full details whose money have been delayed by debtor which must contain the debts amount, dates of maturity and the guarantees, if provided to the creditor.

3.     Information of debtor assets (property) with approximate current value inside or outside UAE, both movable and immovable assets should be counted.

4.     Details of any court proceedings or actions, if taken against debtor.

5.     Clear statement by the defaulter that he/she is facing financial difficulties and are unable to pay now, or are not expected to be able to pay the debts in future.

6.     The necessary funds to support debtor, his/her family or dependents, if any.

7.     Financial statement of money transfer outside UAE during last 12 months.

8.     Other require documents can be passport copy, visa copy, emirates ID or any additional supporting documents if requested by the court should be attached with the insolvency application.

If the debtor cannot fulfill any of the above requirements, he/she shall state the reason in the application.

Reasons when an Insolvency application can be rejected:

The court can refuse a request for settlement of financial obligations in the following cases:

1.     If false information provided by the debtors about their debts.

2.     If court determines that the defaulter has committed, or refrained from, taking any action with a view to concealing or damaging any part of their assets (property).

3.     If debtor failed to pay any of their dues on maturity for more than 40 working days as a result of their inability to fulfill these debts.

Important Points:
·       Amount that a creditor is entitled to apply for insolvency of the debtor and liquidate their funds is 200,000 AED.

·       Court will appoint expert (insolvency secretary) to look throughout the case in accordance with the provisions of Article (8) of the UAE Federal insolvency law.

·       Debtor application can be accepted within 5 working days from the date of submission.

Relief for UAE Expats:
Insolvency law is a big relief to the people of UAE specially families fighting to pay the dues and running out from the country because of financial difficulties.

Another good thing about this law is that insolvent (bankrupt) expats can protect themselves from court criminal prosecution where earlier people faced ban or sometime court put their names in a blacklist after judicial orders.

Link: Check Criminal Status Online

But this time the cabinet offer debtors the opportunity to work freely and live happily with families to be productive for them.

Thanks to UAE Government:
People on social media start praising government and yes all UAE expats must be thankful to the government for their efforts that ensure the convenience not only for its citizens but for residents as it is one of the best ways to respond to the needs of country workers in a favorable condition for both bachelors and families living in UAE.
uae residents about insolvency law

Residents in UAE also admire the recent news which stated “boarding tickets for illegal residents in UAE” which is also starting in 2020 through which illegal expats living inside country can take benefit.

Let’s say “Thanks to UAE Government” for the “Insolvency Law” and all the earlier efforts which really helping debtors and illegal residents in the country, Follow our page and keep visiting us for more important updates.

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