By Umar Awan 
Debt Recovery is highly complex for a layman. Therefore, it requires the assistance of a legal professional who is familiar with the local laws and regulatory requirements. Dubai law firms have an understanding of the process, and this could save you time, money, and energy.
It is an overwhelming task to tackle unpaid debts. The individuals and businesses face problems in meeting unpaid and delinquent amounts. The UAE has a well-structured legal framework to handle this matter.
The debt collection process in the UAE adheres to clear guidelines. This allows the creditors to recover the outstanding payments. Moreover, it also safeguards the interests of creditors and debtors.
Debt Collection in the UAE
Usually, Debt collection is governed by various federal and local laws. They are designed to protect the rights of creditors, debtors, and other stakeholders. UAE focuses on amicable solutions and suggests judicial settlement for debt recovery in the UAE.
Primary legal framework/federal Laws
- Federal Law No. 5 of 1985 on the UAE Civil Code
- Federal Law No. 11 of 1992 regarding the UAE Civil Procedures Law
- Federal Law No. 18 of 1993 concerning the UAE Commercial Transactions Law
All of the laws offer lucrative tools to creditors to recover outstanding amounts. They may use legal channels to reach amicable solutions. If it fails, the court proceedings are taken up as a last resort. The federal laws safeguard the debtor from unfair collection practices in the UAE.
Debts can arise from different financial transactions such as Personal loans, unpaid credit cards, unpaid invoices, rental arrears, bounced cheques, commercial disputes, and much more. For all the types, the procedure remains almost similar.
The Debt Collection Approach
The UAE legal system encourages the associated parties to resolve their financial disputes in an amicable way before relying on legal action.
Numerous debt collection agencies and Lawyers in Dubai specialize in negotiating with debtors. They help in settling the debts through mutual agreement.
Some of the amicable collection methods available are sending formal demand letters to debtors, telephonic follow-ups, negotiating payment plans, rescheduling the payment plans, seeking partial payments, and much more.
This approach is considered to be cost-effective as it reduces legal expenses.
Moreover, it also saves time spent on court action.
It also enables businesses to preserve their relationships with debtors. If the debtor refuses, ignores notices, or is unable to coordinate, this will lead to a possible legal action.
Judicial Debt Collection Process in the UAE
When amicable efforts fail, creditors still struggle to recover debts. It has the right to pursue debt recovery through the UAE courts. The legal procedure normally involves the following steps:
Legal Notice sent to Debtor
The creditor or their legal representative will send an official legal notice to the debtor. This notice is formally drafted to demand the repayment of the delinquent amounts within a certain period.
It is often for 7 to 14 days. Following the UAE Civil Procedures Law, it is essential to
send a legal notice to the debtor before filing a case in court.
Filing Court Case:
In case the debtor fails to respond or ignores the legal notice, the creditor can file a legal case against the debtor in the UAE courts. It will consider factors like the nature of the debt.
Dubai law firms have professional legal experts who can efficiently handle the matter. Civil courts will take up the contractual debts, whereas the commercial courts are for business-related debts.
Bounced cheque cases often land in the UAE criminal courts. It is highly advisable to seek services from law firms in Dubai that have experienced and competent lawyers and attorneys.
Well-versed Lawyers in Dubai draft and submit the legal claims. Accurately prepare the documents required for legal action. They follow the procedural requirements for success.
Final Judgment:
Once the case is filed, the UAE courts will schedule the court hearings. Both stakeholders will represent their evidence with the help of attorneys in Dubai. They will present counter-arguments and, as a result, they will give their final verdict. They will issue the final judgment, which normally favors the creditors.
However, in case of bounced cheques, the court may impose financial penalties under the criminal charges under Federal Law No. 14 of 2020 regulating cheque-related offenses.
FAQs
Q1. Can I recover debts without going to court in the UAE?
Yes, it is possible to recover debts without going to the UAE courts. The creditors are always encouraged to pursue amicable settlements before court proceedings.
A wide variety of unpaid debts are resolved via negotiations, settlements, mediation, demand letters, or payment plans. However, if all efforts fail, then legal recourse is sought as a last resort.
Q2. Does an unpaid debt lead to criminal penalties in the UAE?
Unpaid debts itself is normally handled by the UAE civil courts. However, in case of bounced cheques, the criminal charges may arise under the Federal Law No. 14 of 2020. This would result in hefty fines and jail sentences in extreme cases.
Q3. How much time does the debt collection take?
The timeframe largely depends on the nature of the case and its complexity. Moreover, it also considers how much the debtor cooperates. In some cases, the collection can take place within days or weeks, and sometimes it may take months or even longer.
Torin 
William