UAE Insolvency law – overview & information

In November 2019, the UAE Government announced a new law for personal insolvency, to assist people with debt problems, and this has now come into effect. This is a real game changer as it will give people in difficulties an opportunity to repay what they owe with manageable payments and removes the threat of jail time.

In this article I will cover some of the main points and requirements but I will also update it, if and when there are any changes.

Is there a difference between insolvency and bankruptcy?

It is often assumed that they mean the same thing but they aren’t the same and they are also used differently in different countries.

Insolvency is when an entity – a person, family, or company – becomes insolvent if it cannot pay its creditors back on time, when they don’t have enough cash to meet debts repayments.

Bankruptcy is a legal declaration of one’s inability to pay off debts. People often refer to ‘filing for bankruptcy’ but this it is rarely as simple as it sounds and you can rarely walk away without consequences, whatever films and TV shows may depict. It is also not what is happening here.

Individuals cannot walk away from their debts, and they will not be written off, but they will get time to deal with them and the courts will agree payment plans that all parties must accept and follow.

Why is this so important?

Non-payment of debt in the UAE has always been a criminal issue and this new law gives people an opportunity to negotiate and restructure their debts without the risk of going to prison. This is essentially the decriminalisation of debt and will remove much of the stress associated with financial problems.

When people go down the insolvency route, they should not get police cases registered against them and this will mean it will be easier to change job as there have previously been issues with visa changes when there are outstanding legal cases.

It has also been stated that having a court agreement will mean that outstanding debts should not spiral by the addition of extra fees.

Who qualifies for assistance under these rules? 

To be eligible, a person must either be about to miss a debt repayment or have missed repayments in the last 40 days. Note that they don’t have to be in arrears at the time of the court application but in a position where they are likely to be.

I have not seen anything that states an individual must be resident in the UAE but a person must go to the court in person so, at this stage at least, it appears that they must be physically in the country. The debtor must approach the local court in the emirate they live in, so the Abu Dhabi Courts for an Abu Dhabi resident, the Dubai court for a Dubai resident visa holder and so on.

What’s the process?

The individual has to go to the relevant court to open a case, not against anyone specifically, but instead as a request to the court to help him settle his debt. They must then submit all the required documents (see next section) and pay any fees requested.

The court will appoint an expert to start the procedure and review the case before a decision is made. The appointed expert is supposed to start looking at the case within five days of receiving the notification from the court. The process will include looking at the documents submitted by the debtor, calculating the amount of debt, what are viable payments, and preparation of a report for the court. The expert may be in touch with the debtor.

Once the plan is prepared a copy goes to the creditors (that is, the banks and any other lenders) for their opinion (and I assume they have an option to ask for revision) and it then goes to the court within 22 days of the date of appointment of the expert.

The court then audits the report and approves it, or returns it for revision. Once acceptable a payment plan is devised and must then be implemented and debtors will usually have three years to repay their liabilities.  If debts are significant and there are other assets, either in the UAE or a home country, the court can insist on items being sold to cover debts.

My understanding is that this can be reviewed at a later date and there can be ongoing dialogue but that no further borrowing is permitted during this time.

Documents & items required

As you might expect, the court needs full financial information from individuals who want to go through this insolvency and debt restructuring process. According to the published Federal Decree, the following items are required:

  1. A memorandum containing a brief description of the debtor’s financial position and information about income, both in the UAE and elsewhere. Details of occupation, details of all bank balances. Any information relevant to this in the next 12 months.
  2. A list with the names and addresses of banks and lenders to whom money is owed. The amount owing, end dates for loans, any security ( if a car loan or a mortgage), monthly payments, details of any arrears.
  3. A list of all assets both in the UAE and elsewhere. That is everything. Houses, cars, investments, bank balances, other saleable goods.
  4. A statement listing any legal or judicial proceedings or actions taken against the debtor.
  5. A statement by the debtor explaining that he/she is facing current or anticipated financial difficulties and that he is unable or is expected not to be able to pay all of his debts, whether due at the time of submission of the application or if expected in the future.
  6. A note of the funds necessary to support the debtor, his family and any dependents, so the income is required to live on. I suggest drawing up a proper monthly budget to demonstrate this.
  7. The debtor’s proposals to settle his financial obligations.
  8. The debtor’s confirmation that he/she wants to nominate an expert to undertake the proceedings in accordance with the provisions of the law.
  9. A statement of the disclosure of financial transfers outside the UAE that took place during the last twelve months. Bank statements and other financial statements will support this.
  10. Any other documents supporting the application or as requested by the Court.


The exact amount of fees is specified by the court, after assessing the expertise fees and fees of the judicial proceedings. No monetary figures are shown in the legislation. If the debtor is not in a position to make the payment immediately, the law has provisions for delaying the payment.


The number of people in financial difficulties is substantial so this new procedure will allow people to do the right thing, to repay what they have borrowed, but at a level that is affordable, while also reducing the level of stress that has faced people previously when there was the threat of criminal proceedings and consequences.

This is a real step forward for expats. Many people get into debt due to unfortunate personal circumstances but sadly, there are always some who borrow money to fund a lifestyle which rarely ends happily. I believe that banks need to take responsibility regarding the amount of money they lend and particularly credit card limits, but individuals also need to be sensible and practical.

We know that a significant number of people leave the UAE when they get into financial difficulties in order to avoid police and court cases and potential imprisonment so this may lead to a people staying to handle the problem, which is better for the country, the economy, the banks, and other borrowers. Where people really do want to repay what they have borrowed they will be able to do so while keeping their job in the UAE.


I write articles such as this one as part of the holistic personal financial planning service and that I provide to expats, and the general consumer, financial and legal information that I provide in The National newspaper, on Capital Radio UAE, and on the Facebook group British Expats Dubai. I do not provide a debt management service to individuals.

To arrange a meeting to discuss any aspect of your personal financial planning, please email me at     Please take a look at the other useful articles on this website.

This topic was discussed in my weekly segment on Capital Radio UAE on Sunday 2nd February and the podcast will be available to download for up to 28 days after broadcast.  Capital Radio UAE – Everything UAE podcast 02.02.20

About FinancialUAE

A qualified and experienced Independent Financial Adviser based in Dubai, UAE. Professional and ethical. Freelance writer on personal financial issues & the On Your Side column in The National. Founder of Facebook group British Expats Dubai. Senior Partner at Holborn Assets LLC, Dubai, UAE.
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