Overview Of Debt Collection In UAE
The United Arab Emirates is an international center of business and finance so financial services have special significance there including the debt collection industry.
So let’s learn more about debt collection in the UAE, what it is, why it is crucial, and what are the challenges it faces in the UAE.
Definition of debt collection in UAE :
Debt collection is the process of the debt’s recovery when the debtor defaults on the payment, it includes communication with the debtor, negotiations, attempts to settle the debt or even conducting court proceedings if necessary.
Debt Collection in UAE Market Size :
Debt collection is not only a vital part of the financial system in the UAE but also a growing industry, According to Ken Research:
“UAE Debt Collection Market – which grew at a CAGR of 11.6% in the period of 2017-2022 – is expected to grow at a CAGR of 12.8% in the forecasted period of 2022-2027, owing to increasing emphasis on NLP techniques and changing IT policies and documentation”
In addition, debt collection agencies play an essential role in the debt collection ecosystem in the UAE since they have the largest share in the collection market in the UAE with a percentage of 60%.
Agencies of debt collection in UAE :
Collection agencies are third-party companies that assist the creditor in regaining his debt by amicable or legal strategies, they have all the required expertise that helps them collect debts by negotiating with the debtor and attempting to find the best solution for the claim.
The significance of debt collection in UAE
Debt collectors are a fundamental building block in the country’s economic structure because:
- They help maintain the stable financial situation of the companies.
- Not paying the debt on time badly influences the management of the business’s cash flow.
- Pursuing the debtor is a time-consuming process that impacts the efficiency of the work and makes you distracted while hiring a debt collector gives you the time and space to concentrate on your core business to achieve better results.
- Debt collection agencies help you keep good relationships with your customers because they follow an ethical approach to recovering your debt.
Legal framework of debt collection in UAE
Debt collection in the UAE is governed by a set of articles in the commercial transactions law (federal law no.18 of 1993) and the civil code as well.
Besides, there are some new laws in the UAE from 2019 that deal with debt issues for both companies and people.
These regulations are considered a protective shield for both the creditor and the debtor in order to provide a safe ecosystem for businesses in the UAE.
It is to be noted that the UAE’s legal structure is intricate due to having two systems: the first is the Federal Judiciary that governs the whole country, and the second is the local judicial departments that govern each emirate.
Generally, the legal action in the case of outstanding debts depends on the type of documentation of the debt and the agreement between the two parties.
Typically, the legal solution comes after many other amicable solutions and negotiations with the debtor that may be served by the creditor himself or a mediator such as a debt collection agency or a specialized attorney.
The attorney is also responsible for performing any legal measure through the courts. These legal measures start with simple legal notices, then filing a lawsuit in the specialized court, and in case a judgment is issued, he can start the measures of enforcement.
Challenges of debt collection in UAE :
As we have already mentioned, the UAE is bustling with businesses owned by both natives and non-natives so loans and debts are a major component of this financial structure but the differences of culture and language may be a challenge for most debt collectors.
Additionally, the governing laws exhibit complexity due to the dual nature of the country’s legal system, leading to challenges in the debt collection process in the UAE.
Sometimes, debt collectors face troubles in finding the debtor or contacting him, he can change his contact information and residence or even leave the country, which makes the case more complex.
Another challenge happens when the debtor is facing financial hardships, the debt collection process becomes more problematic, as the debt collector must typically reduce the debt more than usual.
Quick Action: a leading agency of debt collection in UAE
Quick Action is a specialized debt collection agency in Dubai, we provide a comprehensive debt collection service in UAE.
We assist you in recovering your debt through both amicable and legal approaches, we can solve your case with a customized plan that deals with all the attributes of your claim.
Our team has deep expertise in negotiation with debtors through an ethical approach to recovering your debt while preserving good relationships with your borrowers.
Also, our team is well-equipped to deal with all the differences in language and culture to avoid misunderstandings between the two parties.
As for handling legal matters, we are partners with “Al Ramsy Advocates and Legal Consultancy”, this partnership enables us to offer an integrated debt collection service in Dubai, and deal with all the complexities of the law with proficiency and expertise.
In conclusion, debt collection in UAE is a growing industry and it is considered a major part of the financial community of the country since it helps keep the stability of the financial situation of businesses that affect the economy of the UAE as a whole.
The debt collection industry in the UAE may face some challenges, but the leading debt collection agency in the UAE, “Quick Action,” is always working on finding the best solution for them.
So if you have any challenges in your debt recovery, you can contact us now to arrange a free consultation appointment and find the best solution for your case.