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30 November, 2019

New Law to Support Financially Insolvent Individuals in the UAE

The UAE cabinet recently approved a federal law pertaining to the insolvency of individuals.

The new law is specifically expected to help individuals going through or anticipating financial difficulties that would render them unable to clear debts. The law also lays out provisions for such defaulters to rework the repayment terms and also be granted concessional loans.

The Government believes this would respond to the needs of residents and citizens; and provide them the required convenience. By creating favorable conditions for individuals under debt (and possibly facing bankruptcy), the Government strongly believes this would boost the ease of doing business in UAE.

The law is expected to come in force by January 2020. A team of experts, appointed by the court, would assist debtors settle financial obligations within a 3-year time frame.

Other salient aspects of the law include the decriminalization of financial obligations and protection from legal prosecution. The law also handles insolvency by giving the defaulters an opportunity to work, thereby helping them provide for their families.

The law follows the insolvency law of 2016 aimed at companies and is believed by many financial experts to increase the competitiveness and financial health of the UAE market.

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