The UAE Cabinet has approved a federal law to regulate personal insolvency cases.

The law will support individuals who are facing existing or anticipated financial difficulties, rendering them unable to settle their debts. The law will help them reschedule their debts and provide them with the opportunity to be granted new concessional loans.

In addition, the new law will protect the debtors from legal prosecution, decriminalise the financial obligations of insolvent persons, and offer them an opportunity to work, be productive and provide for their families.

The law will come into force in January 2020.

Commenting on the law, Abdulaziz al-Ghurair, chairman of UAE Banks Federation, said: “The regulation will undoubtedly prove mutually beneficial to both the business community and the banking sector, offering individuals an opportunity to restructure their finances while helping local lenders reduce their cost of bad debt.”