Insolvency is applicable when a person who is not qualified as a trader is unable to pay his debts due to debt defaults or bankruptcy. This is usually referred to as the insolvency of the natural person.
Settle the Debt
The Debtor needs to attend court, as per insolvency law. Debt recovery Dubai can be a credible legal help. In such a case, one has to place a request with the court to be allowed to settle his financial obligations with his creditors efficiently to avoid litigation proceedings. If the court finds the debtor to be insolvent, it would comply with the new law, and the application is distinct for approval if in Dubai.
Required Documents to Proceed with a Financial Settlement Request
If the debtor is fortunate enough in the above application some documentation will be needed in Dubai. It includes:
- A statement with the details of the current and expected creditors of the debtor. Generally, the names and addresses of the creditors along with the amount of each debt will be enough.
- A memorandum that gives a sound overview of the debtor’s present financial position. In the document, it must highlight things such as:
- The debtor’s sources of income both locally and abroad
- The liquidity projections of the debtor within 12 months of the application being made.
- The debtor’s professional status at the time of the application.
- A concise statement listing all the debtor’s movable and immovable assets and their approximate value at the time of the application.
- A statement highlighting any legal, judicial proceedings or actions that may have been taken against the debtor.
- A statement from the debtor acknowledging that he is in a financial dilemma. Additionally, he must also state that he was not able to pay his current financial obligations.
- An outline of the money needed by the debtor for these day-to-day expenses such as the upkeep of his family.
- The proposal from the debtor showing how he intends to clear his debts.
- Providing a statement showing all external financial transfers sent outside the country within the last 12 months.
The court may appoint an expert who will oversee the proceedings of the financial obligation settlement. The expert will make sure that all remains within the boundaries of the law.
Failure to Provide the Desired Documentation
If the debtor cannot provide the above documents, he has to state reasons why he has not been able to do so. If these reasons are credible and relevant, the court might extend the time for the debtor to gather more evidence. Once enough documents have been submitted, the court will not make it longer than five working days to make its decision.
When Can Court Reject the Request for a Settlement of Financial Obligations?
The court can refuse to request from the debtor when the debtor falsifies information, and the court feels the debtor is hiding data that may incriminate him in some way.
Obligations of the Legal Assistant
The hired legal assistant is there to work with the debtor to create a feasible payment plan. Copies of the plan will be sent to all of the creditors and finally to the court within 22 working days from the day the expert-created the plan. Extensions to this time can be awarded by the court when found necessary. Within 10 working days of sending the plans to the creditors, the expert will set up meetings between the debtor and each of these creditors. The time and place for these meetings will be set by experts with the aim being to discuss and agree on acceptable plans.
Revisions Made for the Final Settlements
Once all the creditors validate their respective plans, it is still possible to make certain changes if the expert presents these amendments to the court. If the court agrees to all or part of the amendments, it will notify all creditors of the approved changes.
Closure of the Proceedings
When the debtor pays all the delayed payments to his creditors as termed in the agreement, the court shall issue a statement clarifying the closing of all liquidation procedures. This document is in the names of all the creditors along with the amounts paid. The statement is then published in at least two local daily newspapers with one version in English and the other in Arabic. Debt collection can simplify it for you.
Final Results of the Settlement
Once you get into doing a settlement, the debtor cannot obtain any form of a loan or financial assistance for 3 years from declaring insolvency. Moreover, the debtor’s name will be enlisted into a Special Register stating that the debtor was sentenced to insolvency.