Millions of individuals have experienced extreme economic suffering as a result of the economic consequences of the COVID-19-induced pandemic. Many people are still required to labour for less money. Many others who lost their jobs or businesses were unable to obtain productive employment.
Loan Restructuring is a procedure to avoid default repayment by borrowers in financial difficulties and renegotiate the interest rates to change the conditions of their loans with their lenders. It aids in maintaining consistency in debt servicing and provides borrowers with some leeway to regain financial stability.
A Loan Restructuring Process May Involve:
- Increasing the loan repayment period
- Changing the frequency of interest payments
- Reducing the loan EMI
Who All are Eligible for Loan Restructuring in UAE
The eligibility of a borrower for loan restructuring depends on the following parameters:
- How much loss of income or business suffered as a result of pandemic
- Your repayment capability which itself depends on different factors such as credit history
- Document verification and their evaluation by the lender
- The lender’s loan restructuring policy
How to Apply for a Loan Restructuring?
- Discuss your issue with your lenders. You may show that you are taking responsibility for meeting your financial commitments by keeping them updated.
- You should ask your bank to postpone your repayments in light of the ongoing TESS initiative, which enables clients to receive some financial relief if they can demonstrate that they were negatively affected by Covid-19.
- You should keep applying pressure to the bank to replace your present loan and two credit cards with one that has a longer term and lower interest rates. You’ll have some breathing room as a result.
A loan restructuring request letter that complies with specific requirements and includes supporting documentation is required to apply for a loan restructuring. Read the following instructions to learn how to format a loan restructuring letter.
Details to Be Mentioned in Your Loan Restructuring Request Letter
- Your complete address, as well as your contact information or email address, as your lender may need to contact you.
- Entire account details are required, including everything from the account holder’s full name to the account number.
- Request loan restructuring together with your monthly income and mention if there is a crisis that prevents you from repaying the lenders.
- To rest your case, mention the loan details: monthly income, asset worth, the amount owed, and monthly expenses.
- Write your name and signature at the bottom of the letter, and preserve a photocopy for future reference.
Receiving Harassing Calls from Your Bank For Repayment of Outstanding Loan? Know Your Rights!
In the UAE, a customer may ask the bank or financial institution to restructure his or her loan or credit card outstanding payment if they are in default on their obligation to pay off their outstanding credit card balances or personal loans.
- If The Bank Agrees To Loan Restructuring:
The Bank must offer a new repayment plan within ten days of the date it and the customer reaches an agreement to do so for the loan or outstanding credit card balance. The Consumer must receive a written disclosure and explanation of the altered repayment/payment arrangement from the Licensed Financial Institution within 10 full business days after the agreement.
- If The Bank Doesn’t Approve Loan Restructuring:
If the agreement is rejected by the Licensed Financial Institution, they are required to internally record their justifications and notify the Consumer in writing of their decision.
- Say No To Harassment!
Consumer Protection Regulations for UAE Banking Customers, Article 5.2.5.6 states:
Your bank may not harass you while following up on outstanding credit card or loan payments. The bank may not contact its customers excessively or at inconvenient hours to collect overdue credit card or loan amounts.
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