Understanding legal action in debt collection

When a debt goes unpaid for an extended period, creditors may resort to legal action to recover the owed amount. Understanding what this means and how to respond can help you manage the situation effectively and minimise the impact on your life.

What happens when legal action is declared

Legal action regarding debt collection in the UAE typically follows this process:

1. Legal notice: The creditor or collection agency sends a formal legal notice informing the debtor of their intention to take legal action if the debt is not resolved.

2. Lawsuit: If the debt remains unpaid, the creditor may file a lawsuit against the debtor in court. They receive a summons and complaint, detailing the nature of the debt and the amount owed.

3. Court proceedings: If the case goes to court, both parties will present their evidence. If the court rules in favour of the creditor, a judgment is issued against the debtor.

4. Enforcement of judgment: Once a judgment is obtained, the creditor can take further steps to enforce it, such as wage garnishment, bank account levies, or property liens.

Consequences of legal action

Legal action for unpaid debts in the UAE can have severe consequences, including:

• Damage to credit score: A court judgment will negatively impact credit score, making it harder to obtain credit in the future.
• Travel ban: In some circumstances, legal action can include the granting of a travel ban that can limit movement.
• Additional costs: Debtors may be responsible for court fees, attorney fees, and other costs associated with the legal process.
• Wage garnishment: The court may order a portion of the debtor's wages to be deducted directly from their pay cheque to repay the debt.
• Bank account levy: Money can be frozen and eventually seized from the debtor's bank account to satisfy the judgment.
• Property lien: A lien may be placed on the debtor's property, making it difficult to sell or refinance until the debt is paid.

What to do if legal action is taken against you

• Don't ignore the notice. Ignoring legal notices or court summons can make the situation worse. Always respond promptly to any legal correspondence.
• Explore payment options. Work directly with the collection agency, such as Eltezam, to explore feasible payment plans and solutions. They can offer options like paying the balance in full, setting up a manageable payment plan, or negotiating a settlement.

Preventing legal action

The best way to avoid legal action is to proactively address your debt issues.

• Communicate with creditors: Stay in touch with your creditors and inform them of any financial difficulties you are experiencing. They may be willing to offer flexible payment options.
• Budget and plan: Create a budget to manage your finances and allocate funds towards debt repayment to avoid overdue balances.
• Seek professional help: Debt management organisations and financial advisors can provide valuable assistance in managing your debt and preventing legal action.

How Eltezam can help

Eltezam, a debt collection agency in the UAE, offers various options to help you manage your debt and avoid legal consequences. We provide flexible payment plans, negotiation services, and personalised support to help you regain control of your financial situation.

Our team is committed to helping you regain control of your financial situation in a stress-free manner. By understanding the implications of legal action and taking proactive steps to address your debt, you can protect yourself from severe consequences and work towards a more secure financial future.

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