Steven Castelluccia / The National
Steven Castelluccia / The National
Steven Castelluccia / The National
Steven Castelluccia / The National

The Debt Panel: 'We are struggling to juggle our debts on a reduced salary. Should we apply for help under the Tess programme?'


Felicity Glover
  • English
  • Arabic

I earn a monthly salary of Dh11,000, but my employer has cut it by 30 per cent to cope with the fallout of the Covid-19 pandemic. My husband also lost his job last year and we have two children to support.

We have a personal loan of Dh150,000, which I am currently repaying. I am struggling to make ends meet as my salary has to also pay for the rent, our children's education, groceries, medical expenses and other costs.

I also faced a health scare recently. I cannot afford to be rendered incapacitated as I am the sole breadwinner in the family. I have had to ask friends for financial support during these difficult circumstances.

We have a property that is rented out in our home country, but the money from this goes towards supporting my family back home. We are also using a credit card to tide us over when times become financially difficult.

Would we qualify for assistance under the Central Bank of the UAE's Targeted Economic Support Scheme (Tess)? If so, would it be worth it or would our debt problems worsen? Can you advise us on what to do? AB, Ajman

Debt panellist 1: Philip King, head of retail banking at Abu Dhabi Islamic Bank

Unfortunately, the repercussions of the global pandemic continue to be felt by many individuals and families. Unexpected job losses and salary cuts have increased the physical, mental and financial pressure on many people across the UAE.

However, since its introduction last year, Tess has sought to protect vulnerable individuals during these unprecedented times. In addition, many banks have implemented separate measures to support customers who are struggling due to changes in their income.

Firstly, it is highly recommended that you discuss your situation with the bank and emphasise the financial pressure you are facing. This reassures your bank that you are taking your financial responsibilities seriously and that you are committed to not missing any of your payments.

The Tess scheme may help you in the short term, but does not resolve the underlying issue you currently have of spending more than you're making

Under the Tess programme, you can request that your bank defers a payment or provides a payment holiday. To support your appeal, it would be helpful to provide documentation from your employer stating that you faced a salary reduction due to circumstances related to Covid-19. In addition, your husband can provide similar documentation that illustrates his job was also lost as a result of the pandemic.

While credit cards are typically beneficial for short-term spending needs or emergencies, it is important to remember that they can be detrimental when used as a long-term financing tool. Therefore, when engaging with your bank, it would be better to discuss the option of restructuring your loan to one with a longer tenure and lower monthly payments, as well as the outstanding balance on your card to provide you with breathing space.

During this challenging time, we highly recommend that you decrease your spending as much as possible through tight budgeting. We also encourage your husband to continue his job hunt and even consider taking on freelance or part-time work to help relieve some financial pressure.

Debt panellist 2: Stuart Ritchie, director of wealth advice at AES

Rather than taking on more debt in the form of personal loans and credit cards, if possible I would recommend using the income from your rental property to make up the current shortfall.

This would allow you to get on top of your debts, at least until your salary returns to the pre-Covid level and your husband finds employment again.

The Tess scheme may help you in the short term, but does not resolve the underlying issue you currently have of spending more than you’re making.

You may feel that pausing your repayments in the short term will allow you the breathing space to organise your finances.

However, I suggest that you prioritise finding a way to increase your income, either through the additional rental income or through your joint earnings. Without doing so, you will only be delaying taking on additional debt in the future.

Debt panellist 3: Ambareen Musa, founder and chief executive of Souqalmal.com

A drastic fall in your household income is a legitimate cause for worry. And having a loan to manage apart from the costly living expenses is no doubt going to be difficult.

Let's talk about what financial relief options are available to you first. Tess was launched by the UAE Central Bank last year to support struggling borrowers like yourself. Since you haven't availed any financial relief from your bank yet, you should check with them to see if you qualify for a payment holiday.

You could also seek a restructuring of your current loan terms to make repayments more affordable for you. This solution could involve expanding your loan tenure and/or reducing the interest rate to make your monthly instalments smaller.

Ultimately, debt repayment relief may be subject to a number of qualifying criteria and up to the bank's discretion. Approach your bank armed with proof of your salary reduction and use your unblemished repayment track record as a negotiating tool.

In terms of your income, have you or your husband considered taking on part-time or freelance work to help your family tide over these challenging next few months?

Alternatively, do you have the financial means, such as savings or investments, back home that could be tapped into to meet your income shortfall? As tough as it may sound, it is also important not to empty all your savings right away. Your best bet is to convince the bank to offer you some form of financial respite as you try to unlock another income source.

The Debt Panel is a weekly column to help readers tackle their debts more effectively. If you have a question for the panel, write to pf@thenational.ae

UAE currency: the story behind the money in your pockets
The burning issue

The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.

Read part three: the age of the electric vehicle begins

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The burning issue

The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.

Part three: an affection for classic cars lives on

Read part two: how climate change drove the race for an alternative 

Read part one: how cars came to the UAE

Squad

Ali Kasheif, Salim Rashid, Khalifa Al Hammadi, Khalfan Mubarak, Ali Mabkhout, Omar Abdulrahman, Mohammed Al Attas, Abdullah Ramadan, Zayed Al Ameri (Al Jazira), Mohammed Al Shamsi, Hamdan Al Kamali, Mohammed Barghash, Khalil Al Hammadi (Al Wahda), Khalid Essa, Mohammed Shaker, Ahmed Barman, Bandar Al Ahbabi (Al Ain), Al Hassan Saleh, Majid Suroor (Sharjah) Walid Abbas, Ahmed Khalil (Shabab Al Ahli), Tariq Ahmed, Jasim Yaqoub (Al Nasr), Ali Saleh, Ali Salmeen (Al Wasl), Hassan Al Muharami (Baniyas) 

UAE currency: the story behind the money in your pockets
Lexus LX700h specs

Engine: 3.4-litre twin-turbo V6 plus supplementary electric motor

Power: 464hp at 5,200rpm

Torque: 790Nm from 2,000-3,600rpm

Transmission: 10-speed auto

Fuel consumption: 11.7L/100km

On sale: Now

Price: From Dh590,000

A little about CVRL

Founded in 1985 by Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, the Central Veterinary Research Laboratory (CVRL) is a government diagnostic centre that provides testing and research facilities to the UAE and neighbouring countries.

One of its main goals is to provide permanent treatment solutions for veterinary related diseases. 

The taxidermy centre was established 12 years ago and is headed by Dr Ulrich Wernery. 

The specs

Engine: 2.0-litre four-cylinder turbo

Power: 268hp at 5,600rpm

Torque: 380Nm at 4,800rpm

Transmission: CVT auto

Fuel consumption: 9.5L/100km

On sale: now

Price: from Dh195,000 

What is the FNC?

The Federal National Council is one of five federal authorities established by the UAE constitution. It held its first session on December 2, 1972, a year to the day after Federation.
It has 40 members, eight of whom are women. The members represent the UAE population through each of the emirates. Abu Dhabi and Dubai have eight members each, Sharjah and Ras al Khaimah six, and Ajman, Fujairah and Umm Al Quwain have four.
They bring Emirati issues to the council for debate and put those concerns to ministers summoned for questioning. 
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Federal draft laws must first pass through the FNC for recommendations when members can amend the laws to suit the needs of citizens. The draft laws are then forwarded to the Cabinet for consideration and approval. 
Since 2006, half of the members have been elected by UAE citizens to serve four-year terms and the other half are appointed by the Ruler’s Courts of the seven emirates.
In the 2015 elections, 78 of the 252 candidates were women. Women also represented 48 per cent of all voters and 67 per cent of the voters were under the age of 40.
 

COMPANY PROFILE
Name: ARDH Collective
Based: Dubai
Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Sector: Sustainability
Total funding: Self funded
Number of employees: 4
Key facilities
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  • An elevated football field that doubles as a helipad
  • Specialist robotics and science laboratories
  • AR and VR-enabled learning centres
  • Disruption Lab and Research Centre for developing entrepreneurial skills
The%20specs
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The specs

Engine: 4.0-litre V8 twin-turbocharged and three electric motors

Power: Combined output 920hp

Torque: 730Nm at 4,000-7,000rpm

Transmission: 8-speed dual-clutch automatic

Fuel consumption: 11.2L/100km

On sale: Now, deliveries expected later in 2025

Price: expected to start at Dh1,432,000

The Bio

Name: Lynn Davison

Profession: History teacher at Al Yasmina Academy, Abu Dhabi

Children: She has one son, Casey, 28

Hometown: Pontefract, West Yorkshire in the UK

Favourite book: The Alchemist by Paulo Coelho

Favourite Author: CJ Sansom

Favourite holiday destination: Bali

Favourite food: A Sunday roast

Indika
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While you're here
Specs

Engine: Dual-motor all-wheel-drive electric

Range: Up to 610km

Power: 905hp

Torque: 985Nm

Price: From Dh439,000

Available: Now

The specs
  • Engine: 3.9-litre twin-turbo V8
  • Power: 640hp
  • Torque: 760nm
  • On sale: 2026
  • Price: Not announced yet
Company profile: buybackbazaar.com

Name: buybackbazaar.com

Started: January 2018

Founder(s): Pishu Ganglani and Ricky Husaini

Based: Dubai

Sector: FinTech, micro finance

Initial investment: $1 million

CHATGPT%20ENTERPRISE%20FEATURES
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Engine: 1.5-litre turbo

Power: 181hp

Torque: 230Nm

Transmission: 6-speed automatic

Starting price: Dh79,000

On sale: Now