We are all familiar with bankruptcy and in the UAE there are so many bankruptcy cases that are processed every year. When you sign up for bankruptcy, you are simply declaring that your financial status is at risk and that you are asking for help to deal with your debts. Usually, lenders take responsibility for your debts, and in turn, you enjoy a more simplified and extended debt payment program that will suit your current financial status.
Although it sounds simple, you should know that bankruptcy cases are critically observed in the UAE. That is because some people don’t provide their actual financial status and take advantage of bankruptcy to avoid paying debts. It is also good to note that not all bankruptcy cases in the UAE are accepted by the respective authorities, especially if they do not meet their requirements.
Types of bankruptcy
There are two main types of bankruptcy cases handled by the UAE courts namely:
Personal bankruptcy cases: These are cases filed by individuals who are facing hard financial times. These are also people who have outstanding debts like loans which need to be paid regularly (like monthly or annually.) Personal bankruptcy cases are not very complex provided you meet the criteria and have the right attorney.
Company bankruptcy cases: These are bankruptcy cases that involve companies that can no longer meet their financial obligations. Unlike personal bankruptcy cases, these can be far more complex and require a lot of processing and evaluation. On top of that, a company that files for bankruptcy stands a 50-50 chance. It can dissolve or get rehabilitated depending on the nature of the case.
How to file for bankruptcy in the UAE
Financial situations can be stressful if you don’t have the right back up. Whether you are filing for personal or company bankruptcy, you will need to consider the following rules to improve your eligibility:
Give correct and accurate details.
Once you file for bankruptcy, an audit is conducted to determine your assets and current financial standings. The audit is to prove that you are genuinely in trouble and genuinely need help. If you provide details you state are correct and the audit report proves otherwise, it will be impossible for your claim to be filed in the UAE.
Avoid additional debts
Since you or your company are already sinking in debts, you are required to freeze any further borrowing even before you file for bankruptcy. This will keep you out of trouble, especially with creditors. Some creditors can decide to take legal action against you if you file for bankruptcy immediately after borrowing money. That is because fraudsters use this tactic to avoid paying their debts.
Get the right legal help
You will have to work with a reasonable attorney or partner if you want your bankruptcy claims to be considered in the UAE. This because they are well versed with these types of cases giving them an upper hand when it comes to getting your case considered by the courts.
Leave everything as it is
One big mistake that many people make when filing for bankruptcy is salvaging assets not to be included in their financial audit report. This is usually common with company bankruptcy cases where people tend to move or hide assets like machinery so that their company’s value goes down and improves their chances of winning the case. If you are caughtdoing such tactics you might end up facing more problems with the strict UAE courts.
The UAE has one of the best bankruptcy laws globally, especially for companies as was reviewed in 2016 to cushion businesses and companies during hard financial times. However, the same law is ruthless to unscrupulous business people trying to take advantage of the system. Nevertheless, the whole bankruptcy law in UAE revolves around goodwill and the benefits can save you from unwanted embarrassment.
If you need any assistance filing for bankruptcy HHS Lawyers in Dubai are more than capable of helping.Team can easily guide you through the process step by step.