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[sage & onion]

http://www.7days.ae/storydetails.php?id ... 0situation

The following letter is in 7 Days this morning, anyone know if this is correct?

Dear John,

regarding your strange letter in 7DAYS, I know that there are many people like you in the country who have their passports held by police due to outstanding amounts referring to credit cards, cheques, rents and loans. I am not a lawyer, but to the best of my knowledge, your car loan is not settled which means that your vehicle is still mortgaged by the bank. If you sell it to them, they will be able to close your car-loan amount. As for your personal loans, it states clearly in any bank loan application that in case of death or job loss the bank will not claim the outstanding amount from anyone else. Check the million copies the bank made you sign when you first applied for a loan, read carefully the conditions and then you can stop being chased for it. Any bank rep usually mentions this upon processing the loan papers. Bank loans also happen to be insured by a third party insurance company and will be settled should you not be able to do so in the two circumstances I mentioned. This way you can close this case, collect your passport, stop sleeping in your car and head back home! You’re right, they can’t lock up everyone, otherwise who will chase and settle those who left their vehicles and credit cards at Dubai Airport and fled back home?! Good luck.
Nawaf Abu Ghazaleh
Dubai

[dresden]

To an extent I belive this is somewhat correct.

For example, in the America's and elsewhere:
Credit card's and personal loans (some) are "unsecured". The bank takes the rish for a default on the loan. Hence their requirement of certain credit scores, scrutiny of pay and work history etc.

If you default on a unsecured loan (ex. credit card), they can legally harrass you through the telephone and mail, but can do little else. Most credit card companies will turn over the file to a 3-rd party Collection agency to do the dirty work, for a cut. This is common practice until it is no longer "economically feasible" .. meaning the amount outstanding is not worth the time.

Secured loans, (i.e. Mortgages, Car loans etc.) are a bit different; the article you posted is correct, but the terminology is bit off. If you default on your car payment for example; for whatever reason, the bank can "Repo" the car to set off the account *your not really SELLING the car back to the bank*. If there is still an outstanding amount, the bank will have limited rights to reclaim the remaining amount.
In short, if a bank lends you $200,000 for a car that's worth 100,000 and you end up defaulting (provided you actually forked over $200k for it), they can repo and resell the car (say they get back $100K). The remaining 100K may have to be written off, although they will try and get you to pay it anyway. Hence the appraisals done by banks when lending.

Also note, you can be found criminally responsible for unsecured loans as well. Ie. If you withdraw the funds the next day and never pay back a penny. -- Although a good lawyer can get you off depending on circumstance.

In a place like Dubai, I highly doubt the aforementioned principles differ too much. However, what does differ is how the law is carried out...
If every Tom, banana and Harry thought they can default on their loans and cruise on back to hometown, I think Dubai would be bankrupt in an hour, if not less.
So that's where I disagree with the article. I don't believe that bank loans are insured by third party companies... However, credit swaps between institutions are frequent (which is one of the reasons behind the collapse of Wall street) -- So it is kind of an insurance, in a convoluted way.

Yes, They cannot lock up everyone. But I doubt it will stop them from trying!