Dubai has robust debt collection laws that force creditors to follow a set protocol when collecting outstanding payments. The laws are aimed at protecting both the creditor and debtor to ensure that there is fairness and justice in the process.

In this article, we shall explore Dubai’s debt collection laws and explain whether authorities can arrest your bank account or property, highlighting key aspects of the asset seizure UAE procedures.

How Debt Collection Works Legally in Dubai

The legal process of debt collection Dubai starts when the creditor files a case in court. The court then issues a summons to the debtor, including the amount and legal action filed.

When the debtor fails to reply, the court enters a default judgment against the debtor. The court fixes a hearing date if the debtor replies.

During the hearing, the creditor presents evidence of the debt, while the debtor may contest the claim with his own evidence. The court, in favor of the creditor, enters a judgment against the debtor if it allows judgment.

After the judgment is issued, the creditor can go ahead and collect the debt in Dubai under the legally permitted means of enforcement. Most importantly, creditors must comply with legal procedures under the UAE Civil Code and Commercial Transactions Law. Otherwise, they may well find themselves having to answer for their actions before the law.

Asset Seizure UAE: Can a Debt Collector in Dubai Take My Property?

Dubai debt collectors are required to use formal legal procedures before they can confiscate a debtor’s property for the recovery of unsettled debts. The practice is a very critical aspect of debt collection in Dubai.

Initially, the creditor sues the debtor before a court and obtains a judgment against him. After obtaining the judgment, the creditor applies to the court for the issuance of a seizure order. After its issuance, the court issues a seizure order to be executed by a bailiff and to be seized.

However, not all kinds of property can be seized. According to the UAE Civil Code, some properties are exempted, such as the principal residence of the debtor, personal effects necessary for their use, and tools necessary for their profession. The principal residence of the debtor is exempt if he or she possesses multiple properties.

Also, if the property is mortgaged, the creditor can only seize the equity value. For instance, if a property is valued at AED 1 million and has a mortgage of AED 500,000, the creditor can only seize AED 500,000 in remaining equity. 

With respect to companies, creditors can only seize assets that belong to the company, not to the shareholders or owners individually.

By and large, debt collectors in debt collection UAE are bound to observe all legal procedures while going for asset seizure. Ignoring such laws can get the creditor to court.

Can a Debt Collector in Dubai Freeze or Seize My Bank Account?

Dubai creditors can seize a debtor’s assets, including bank accounts, to recover outstanding debt—but only after following some legal procedures. It is part of the asset seizure UAE and debt collection Dubai. Though some assets cannot be seized according to the law, the court may pass seizure orders in some cases.

In order to start the process, a creditor must bring a case before the court under the UAE Civil Code and UAE Federal Law No. 18 of 1993. Once the court issues a judgment, the creditor can pursue various legal channels to reclaim the debt, including freezing or seizing the debtor’s bank account.

However, prior to that, the creditor must follow due process of law. This involves seeking a judgment from a court of law and then requesting an order to freeze the debtor’s bank account.

According to the UAE Civil Code, the creditor may attach funds in a bank account, yet the debtor may retain a minimum amount, so-called “personal exemption.” The exemption is determined by the court based on the debtor’s income.

Once the court has figured out the personal exemption, the creditor can request that the court freeze the remaining money in the account until the debt has been paid off in full. Joint bank accounts can be taken by creditors as well, but the court will only have the amount legally belonging to the debtor frozen.

Conclusion

The process of asset seizure and bank account seizure for debt recovery in the UAE is strictly regulated. The regulations govern the conduct of creditors and debtors.

So, for example, creditors must obtain a court order before taking any enforcement action against debtors (e.g. freezing their bank account or seizing their assets), and some assets will probably not be available for the creditor to seize against a judgment (for example, the debtor’s principal residence and basic tools of trade are exempt from seizure under the UAE Civil Code). 

Moreover, creditors can freeze a debtor’s bank account, but the courts will generally order that debtors can have a minimum amount of money in that account to spend on their personal needs. Creditors must comply with the law 100%, or else face liability.

Therefore, creditors wishing to pursue debt recovery in the UAE need to control the process carefully, ensure compliance with the law, and document all steps taken, ideally with the expertise of Khairallah Law Firm, one of the Best Lawyers in Dubai.

Having said that, contact Khairallah Advocates & Legal Consultants and benefit from our free 30-min legal consultation.

*Disclaimer: our blogs, law updates, and FAQ’s are freely distributed for educational purposes and to showcase recent updates and regulations in the UAE’s framework.

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