The New Debt Law in the UAE: Everything You Need to Know

Since January 2020, the new insolvency law in the United Arab Emirates has been fully in effect. Through local legislation, debtors in Dubai and other Emirates are protected from legal actions.

Under the new federal insolvency law, debtors' financial responsibility is no longer pursued criminally, including a repayment plan over three years. In this guide, you will learn more about the new debt law in Dubai and how it benefits citizens of the UAE struggling with debt.

Since when has the new law been in effect?

The debt law of the UAE has been effective and came into force in January 2020.

Is the insolvency law similar to bankruptcy law in the UAE?

The new bankruptcy law of the UAE was enacted to support and protect individuals facing financial difficulties. Bankruptcy law focuses on the liquidation of companies and insolvency proceedings.

How does the new law support individuals in debt?

The law aims to protect Emiratis and residents who are experiencing or anticipating financial problems and are unable to repay their debts. It allows for the restructuring of their debts with the possibility of obtaining "new discounted loans." Under the new law, court-approved repayment options with milder terms, possibly through reduced interest rates, are offered.

How does the court handle debts?

Under the financial insolvency rules of the UAE, the court will appoint an expert to handle the debt settlement. In collaboration with the debtor and their creditors, the expert will create a three-year debt restructuring plan. Upon completion of the plan, all financial obligations will be fulfilled under the agreed terms.

Is it still possible for individuals unable to pay their debts to go to jail?

No, the new law "protects debtors from legal prosecutions, decriminalizes the financial obligations of insolvent individuals, and allows them to work, be productive, and provide for their families." For the first time, debtors are granted a period of up to three years to settle their debts.

What options are available to resolve financial insolvency under the new debt law of the UAE?

The new federal law on debts in the UAE provides two procedures for resolving individual financial insolvency: a financial obligation settlement plan or insolvency and asset liquidation.

Are debtors allowed to take additional loans during the settlement period?

No, debtors are not allowed to take additional loans unless ordered by the court upon request of the debtor, creditors, or authorized expert.