42 percent of Dubai's central jail are debtors
According to police, 42 percent of the 3,000 inmates in Dubai's central jail are there because they did not repay bank loans.
The practice of jailing debtors more usual in 18th century England than in an ultramodern city (execupundit.com)
The practice of jailing debtors more usual in 18th century England than in an ultramodern city illustrates the downside of this Gulf city-state's frantic boom.
Many people here struggle to make ends meet in a place flush with oil cash and real-estate money, with ever-taller skyscrapers, stretch limos, spacious villas and opulent shopping malls. Surrounded by so much wealth, many succumb to the temptations of a lifestyle they cannot afford.
Dubai's lack of a central credit-check authority, coupled with its lack of a personal bankruptcy court system and banks' willingness to give consumer loans with virtually no collateral, have prompted even the police to complain that something must be done.
"If they cannot pay, we cannot release them," said Lt. Col. Abdulhalim Mohammed al Hashimi of the Dubai Central Prison.
The case of Mubarak, a 28-year-old Emirati, is typical. He was working 12-hour shifts as a crane operator in Dubai's port when he took his first bank loan to buy a car and furniture.
Even though he fell behind in the payments, he still managed to get two more loans from two different banks, each bigger than the one before.
He used one loan to pay off another but stopped making payments on the two others. After he ignored court summons, the bank deposited the blank check that he had presented as his sole collateral.
The check bounced and he was sentenced to three months in jail. He'll stay there longer if no one steps forward to pay the US $44,700 (euro33,250) debt.
In the United States, such a case would head to bankruptcy court, where the debtor would have a chance to sell off assets and restructure some debts to slowly pay them back.
But in Dubai, with no laws regulating defaults on personal borrowing, a person jailed for such an infraction is likely to remain there even when their sentence is over until a relative, charity group, wealthy businessman or even a member of the ruling family pays off the debt.
Police official Mohammed Murad complained that 60 percent of the police force is busy chasing deadbeats and chides banks for promoting rampant consumerism with easy cash. He contends banks would be more careful with loans if they had to share the cost of imprisoning debtors.
"Each one of them costs as much as someone in a five-star hotel," Murad said. Source
The practice of jailing debtors more usual in 18th century England than in an ultramodern city (execupundit.com)
The practice of jailing debtors more usual in 18th century England than in an ultramodern city illustrates the downside of this Gulf city-state's frantic boom.
Many people here struggle to make ends meet in a place flush with oil cash and real-estate money, with ever-taller skyscrapers, stretch limos, spacious villas and opulent shopping malls. Surrounded by so much wealth, many succumb to the temptations of a lifestyle they cannot afford.
Dubai's lack of a central credit-check authority, coupled with its lack of a personal bankruptcy court system and banks' willingness to give consumer loans with virtually no collateral, have prompted even the police to complain that something must be done.
"If they cannot pay, we cannot release them," said Lt. Col. Abdulhalim Mohammed al Hashimi of the Dubai Central Prison.
The case of Mubarak, a 28-year-old Emirati, is typical. He was working 12-hour shifts as a crane operator in Dubai's port when he took his first bank loan to buy a car and furniture.
Even though he fell behind in the payments, he still managed to get two more loans from two different banks, each bigger than the one before.
He used one loan to pay off another but stopped making payments on the two others. After he ignored court summons, the bank deposited the blank check that he had presented as his sole collateral.
The check bounced and he was sentenced to three months in jail. He'll stay there longer if no one steps forward to pay the US $44,700 (euro33,250) debt.
In the United States, such a case would head to bankruptcy court, where the debtor would have a chance to sell off assets and restructure some debts to slowly pay them back.
But in Dubai, with no laws regulating defaults on personal borrowing, a person jailed for such an infraction is likely to remain there even when their sentence is over until a relative, charity group, wealthy businessman or even a member of the ruling family pays off the debt.
Police official Mohammed Murad complained that 60 percent of the police force is busy chasing deadbeats and chides banks for promoting rampant consumerism with easy cash. He contends banks would be more careful with loans if they had to share the cost of imprisoning debtors.
"Each one of them costs as much as someone in a five-star hotel," Murad said. Source
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