The concept of debts can be traced from the time of the barter system, where people used to exchange goods and services. If a party failed to deliver the promised goods in exchange for goods, the need for claiming the debt arose.
We have faced quite a few cases regarding outstanding debt in the UAE in our experience, and it may not be commercially viable for the creditor to file a lawsuit against the debtor in each case. Accordingly, the Legal Consultants in Dubai will guide you in collecting outstanding debt in the UAE in the most optimal manner.
Debt collection is understood as requiring the debtor to repay the amounts borrowed by him to the creditor. Apart from adopting the traditional court route, other options may also be explored by the creditor. Appointing a debt collection agency, phone calls and emails to the debtor and serving a legal notice are a few of the options which may be used by the creditors to recover outstanding debt.
Nevertheless, this article is concerned with the steps which a creditor can consider, before heading to court to resolve the dispute.
The Strategies
- Determine the Credibility
The first and foremost strategy, even before the debt is provided, is to check the veracity of the creditor and his credibility in the market. You must also ascertain his past business relationships in the market to ensure that your debt is secure. You may also seek a police clearance certificate to check if he has any pending cases in the country.
- Keep Proper Documents
We have come across numerous cases of outstanding debt, where the clients have no proper documents to evidence the outstanding debt such as the receipt of payments, any written contract or acknowledgement of the debt. It is always advisable to keep proper documents to be prepared for uncertain events.
- Obtain a Security Cheque
Outstanding debt can be secured through a security cheque, which enhances the level of safety. On the date of payment of the debt, if the debt is not repaid, you can encash the security cheque to seek the outstanding balance. Further, if the cheque is dishonoured, court proceedings may be initiated in this regard.
- Amicable Settlement
The debtor can reach out to several agencies which help in collecting outstanding debts or may appoint a Lawyer for serving a legal notice to settle the matter outside court, failing which, court proceedings will be initiated.
- Ascertain Your Legal Options
Lastly, if an amicable settlement has not been reached, the next step is to understand the available legal options, including the legal costs of each option.
Filing a Civil Case
Broadly, the procedure for initiating a civil or commercial dispute for claiming an outstanding debt would include resolving the matter amicably, in accordance with the Federal Law Number 26 of 1999 On the Establishment of Conciliation and Reconciliation Committees at the Federal Courts, which obliges the parties to reach out to the conciliation committees to resolve the matter amicably failing which, the parties would be allowed to refer the matter to the relevant court.
Any matter referred before the court should be well documented with Arabic translations along with the appropriate court fees. The matter will then be decided by the court on the merits and circumstances of the case. Either party, after receiving the judgment from the Court of First Instance, has the right to file an appeal within 30 days from the date of the judgment before the Court of Appeal and 60 days from the date of judgment issued by the Court of Appeal to file the matter before the Court of Cassation.
Conclusion
The most effective approach to recover the outstanding debt is without resorting to the courts. The strategies mentioned above may prevent you from lending to debtors who have no intention to return the money owed to them.
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