In order to boost the ease of doing business in the UAE, the cabinet has approved a new federal law creating favourable conditions for individuals facing financial difficulties and protecting those who are unable to pay their debts from going bankrupt.
The law valid for citizens as well as residents will come into effect in January 2020 and will support individuals who are facing existing or anticipated financial difficulties which may lead them towards debts. The new law helps them reschedule their debts and provide them with the opportunity to be granted new concessional loans.
In addition, the new law decriminalise the financial obligations of insolvent persons, and protects them from the hassle of legal prosecution. Instead, the debtors will now have an opportunity to work, earn and provide for their families.
Debtors will now get a time period of three years to come up with a plan to settle their financial liabilities with the help of an expert who will act as an mediator between the debtor and the creditor. During this period, the debtor will be prevented from taking any loans until the court decides.