Are you a loan borrower and have found your way into a loan defaulter’s list? Don’t worry. You don’t have to get stressed or harassed about it. This is definitely one of the situations we would never want to be in, but life is just not fair sometimes.
So here are a few tips to help you get out of a home loan defaulter’s list:
1. Reschedule Repayments
If you have a decent track record so far, you can request the bank to reduce your EMI burden and extend your loan tenure. Even though this adds to your interest burden in the long run, it’s a short-term solution. Once everything gets stable, you can talk to your bank again and request them to increase your EMI, as convenient.
2. Deferring payment
In cases of loss of job, several banks agree to deferred payment, allowing you to take a break from repayment now, and resume payment when convenient. However, the bank may charge you a penalty for non-payment.
If you are towards end of loan tenure, see if you can pool in funds from friends and family to foreclose the loan. This will not only save harassment from bank but will also give you an option of repaying friends and family as convenient.
4. Selling the property
Selling off your dream home is a tough decision, but when all fails, this is one way you can pay off all your dues to the bank.
Rights of a Loan Defaulter
There are some rights you have as a borrower, which are set by the Banking Codes and Standard Board of India (BCSBI), in association with Indian Banks Association (IBA). The code of conduct lays down guidelines for loan recovery by the bank.
Here are the guidelines for loan recovery:
1. Sufficient Notice Period
The bank must inform you about your dues with a formal notice, giving you sufficient notice period for payment. It must give a minimum notice period of 7 days before initiating the loan recovery process.
2. Time of Calling
The bank cannot call you at odd hours. Ideally, it should contact you only between 7 am and 7 pm and must maintain a record of all the conversations. Also, the bank is bound to honor any requests to not call you at certain hours.
3. Civil Behaviour
Even though you are finding it difficult to pay back your loan, you have a right to not being branded a defaulter. Approach your bank for an amicable settlement and cooperate with them. Also, bank representatives must follow a code of conduct. Any abusive language or violence is considered a criminal offence. They must respect your privacy by avoiding discussing details of loan in front of others.
4. Place of Meeting
Setting up meetings with bank representatives has to be done at your convenience. The time and place of meeting is decided by you and not the bank. If you haven’t specified a venue, then the bank officials can contact you at your residence or work place. However, they must respect your privacy at all times.
5. Repossession of Property
Indian Bank Association (IBA) has laid down rules for due collection process, including guidelines for repossession of property;
The bank shall opt for repossession of borrower’s property only as a last resort.
It must give a prior notice to the borrower.
The borrower has a right to repossess his assets after clearing all dues.
After taking custody, the bank must ensure safety and security of the asset.
After selling the property, bank must handover left over amount to borrower, if any.
6. Customer Complaints
All customer complaints related to recovery agents or bank representatives must be investigated by the bank. You can also take up the matter with the Banking Ombudsman if your are dissatisfied with the bank’s response.
7. Details of Recovery Agents
Bank’s usually hire professional recovery agents to recover dues from borrowers. All banks should post complete details of their recovery agents on their websites for customer reference. Also, all bank officials contacting you must have an authority letter and proper identity cards; issued by the bank. You have the right to refuse to interact with any official not bearing the same. Defaulting on loan repayments is a situation anyone could face. Don’t run away from the situation, start talking to your bank to find an amicable situation. If you have a genuine problem, then the bank will be willing to work out a suitable solution.
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