Dubai court declares man insolvent as his loan installments exceed total salary

Dubai Civil Court declared the insolvency of a Gulf citizen, who had accumulated bank debts of Dhs1.029 million in favor of three banks, after the insolvency trustee’s report proved that he did not possess funds or properties that could be used to pay off the debts.

The court ordered the end of insolvency procedures and prevented the man from getting new loans or financing for three years, in accordance with the legal provisions regulating insolvency.

Earlier, the debtor obtained bank financing worth Dhs550,000 in November 2024 with monthly installments of Dhs13,000 but as he stopped fulfilling his obligations, the financing bank returned a cheque worth Dhs550,000 due to insufficient balance in September 2025, bringing the bank’s claim to Dhs555,000.

The debtor also got a personal loan of Dhs395,000 from another bank in May 2025 with monthly installments of Dhs9,257 in addition to debts arising from the use of two credit cards from two different banks, the outstanding balance on one of them reached Dhs80,000, bringing the total debt recognized by the court to Dhs1,028,980.

The documents revealed that the debtor held a government job and earned a gross monthly salary of Dhs20,645, whereas the installments for the two loans alone amounted to Dhs22,717 without accounting for credit card obligations or living expenses.

The debtor explained to the court that he used to spend around Dhs21,000 per month to support his family, while the documents proved that he owned neither real estates registered in his name, nor trade licences or shares listed on Dubai Financial Market and that he lived with his family in a residence owned by others.

An examination of his bank accounts revealed he had limited balances and owned a 2011 model car, an asset the court deemed essential for his personal use and daily living needs.

The court affirmed that the insolvency trustee’s report disclosed no assets subject to liquidation and that the debtor’s bank balances did not exceed his subsistence requirements, rendering further liquidation proceedings groundless. Consequently, the court ruled that the debtor be declared insolvent and the proceedings be terminated.

According to Dr. Alaa Nasr, the debtor’s legal representative, decisions declaring the insolvency of distressed individuals are based on a comprehensive financial investigation and a review of debts, bank balances and assets.

These proceedings often conclude that the debtor is unable to meet their obligations and possesses no assets available for liquidation, he added.

Declaring insolvency is a judicial procedure that regulates the debtor’s legal status in accordance with established regulations, while the debtor is subjected to certain statutory restrictions for three years during which his basic needs and family obligations are taken into account, he said.