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When looking for a debt settlement company, it’s important to consider the following factors:

– The company’s fees: Make sure you know how much the company will charge and what services they provide.

– The company’s reputation: Do your research and make sure you choose a reputable company with solid management team and a good track record.

– The company’s experience: Make sure the company has a lot of experience in debt settlement and knows how to negotiate with creditors.

– The company’s approach: Make sure the company has a plan that is right for you and your specific situation.

Loansettlement.com is led by experienced entrepreneurs who are alumni of IIT, IIM and MIT USA. They bring more than 30 years of entrepreneurial experience in varied domains – finance, consulting, online education and global careers management.

Our goal is to assist individuals in financial difficulties in getting out of debt. It’s widely acknowledged that if you default on your loan payments in India, recovery agents will pursue you and your life will become hellish, despite several Supreme Court rulings prohibiting the use of harsh measures during collection. We not only help you to negotiate settlement with the banks/ NBFCs but also put a stop to this kind of illegal harassment.

If you’re looking for a debt settlement company in India, please contact us today. We have significant expertise and we know how to get the best results for our clients.

For more information and to talk to our financial and legal advisors, register at loansettlement.com.

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Here are some options to repay EMIs during difficult times:

• Create and Maintain Emergency Fund

The future is always uncertain but it can be at minimal risk with an emergency fund. Creating a savings account or a fixed deposit and accumulating funds in it regularly can come in handy at times of crisis. It makes sure one doesn’t fall into a debt trap or lose creditworthiness. Ideally, this amount should be at least six times the current monthly income. The emergency fund can help pay the EMIs and ensures there is no default.

• Insurance for the loan

Loan Insurance, also known as Loan Protection Insurance, is a service designed specifically to cover the monthly loan payouts in case of temporary/permanent disability, loss of job, or any such eventuality. It protects the borrower from defaulting on loans. A loan protection insurance plan is a short-term measure, but beyond it, you will need concrete ways to repay your debt.

• Dispose of assets to raise funds

Assets such as gold, car, electronics, or furniture that are not necessarily needed can be sold to raise funds. Long-term investments, like Public Provident Fund, which focuses on inducing small savings to accrue returns on the same, can be used to save your ship from sinking into the debt trap.

• Communication is the key to any relationship

Under genuine circumstances of loss of livelihood or medical condition, along with a good track record of credit, can help convince the lender to aid with late repayment of EMI. After evaluation of the credit history and the seriousness of the circumstance, the lender may provide one of the following options:-

1. Grace period: A grace period is a period after the due date during which payment may be made without resulting in loss of creditworthiness. During this time, no interest accrues to the loan balance as long as it is paid within the time further provided.
2. Restructuring the loan: By restructuring the loan, the tenure period and the EMI amount is modified to fit the situation of the customer to repay the amount feasibly.
3. Reduction of interest rate: A lower interest rate may be offered with certain terms and conditions. However, this reduction must be permissible within the rate grid and a rate below that is neither permissible nor customary.

It is always inadvisable to get tangled in the legal path whilst repaying the loan. Thus it is important to maintain contact with the lender and repay the dues in time.

One must note the following points:

• In case of home loan, if the lender is ready to auction the property, the amount can still be paid before the auction or an appeal can be made in the Debt Recovery Tribunal to stop the auction.
• 90 days is the limit after which the loan amount becomes a Non-Performing Asset (NPA) and the lender can initiate recovery process.
• Last but not least- plan your finances. Finances should be planned, budgeted, and regularly managed to maintain personal funds carefully.

If you are not able to repay your credit card dues, consider loan settlement. Register and talk to our counsellors for more information.

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The recovery process usually involves negotiating certain conditions of the loan agreement to help the borrower to repay the dues. Debt usually becomes bad when it hasn’t been paid for three months consecutively and lenders call within this time to check if the repayment was forgotten or if it was unavoidable. The borrower, after discussion, is provided with sufficient time to repay the dues. 90 days past the due date, lenders appoint recovery agents. Mandated by the RBI lenders are to provide details of the recovery agency on their website. It is the borrower’s responsibility to verify the authenticity of the agent.

Agents work on tight schedules engaging in multiple cases every day. They usually call in the first 18-30 days to seek information and time for the payments due.  Agents usually call between 7 am to 7 pm unless otherwise requested by the borrower due to business circumstances or occupational obligations. RBI also mandates a recording of conversation- time, content, and number of calls that were made by the agent to the borrower. The same should be made available when demanded by an authority.

If the due remains unpaid despite the efforts, it automatically enables the agent to meet the borrower personally. However, the visit is to be duly informed. The agent must conduct themselves according to the code of conduct laid down by the RBI. It promotes courtesy and fair treatment as per following guidelines:

(a) The borrower will be contacted at the place of their choice.

(b) Identity and Authority of the representative would be made known at the first instance to the customer.

(c) Client’s privacy must be always respected.

(d) The interactions should be civilized.

(e) Representatives will only contact the customer between 7 am- 7 pm.

(f) Any request to avoid calls at a particular time must be honored.

(g) The time, the number of calls, and content will be documented.

(h) All assistance would be given to resolve disputes.

Furthermore, the contract between the lender and agent must ensure lawfully moral methods during the process.

Lenders are vicariously accountable for the actions of the agents. Inducing the agent with incentives can lead to serious complications. Change in the agent appointed to a borrower must be duly notified by the lender promptly and such agent must carry the notice of appointment along with an identity card.

Following the above narrative, here are a few pointers to avoid recovery agents entering the doorsteps of your house:

(a) The most obvious and foremost- Pay the EMIs on time. Never delay the repayment of dues if possible.

(b) Plan and create reserves to use during the slump. Use them to get out of the debt.

(c) Just like any other relationship, communication is key here as well. Make sure to inform or ask for advice from the lender in case of an unforeseen circumstance that builds trust and understanding.

(d) Avoiding calls or meetings with the agent will create mistrust. Determine your payment ability and do not overpromise.

To err is human. Not everyone traps themselves in debt willingly. There are multiple methods and assistance provided to help get out of a debt trap.  Instead of carrying the burden alone, it is advisable to seek help from lenders, family and friends and professionals in debt settlement. Moreover, RBI monitors the work done by lenders and agents to make the borrower or client comfortable. With the proper knowledge and assistance, what seems strenuous can be finished smoothly.

If you are facing harrassment from the recovery agents, register and talk to our counsellors.

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Step 1: Keep records of conversation with the bank

Once the outline is drawn about the issue(s), an individual can contact the bank about it. There are multiple ways to initiate contact with the bank. Banks usually have a separate retail division to help customers with loan settlements. One can even call the number provided on the website or agreement or write to their office address or email them.

These records are for future references. Emails are easier to keep a copy of but that is not the case with phone calls. It is important to take note of the executive one will be talking to and correctly note the complaint number generated after logging the complaint. In case the dispute is communicated in writing, banks make certain to send an acknowledgment of the same.

Step 2: The Dispute Resolution Procedure

By law, each bank must provide the email address, the mailing address, and the customer care number to be contacted in case of a dispute. These are usually provided on the bank’s website. Supported by the recommendations of the Damodaran Committee, the Indian Bank Association, and also the Ministry of Finance, each bank enables customers to register their complaints online through the website. It also states when to expect a reply and provides the hierarchy of the redressal mechanism. In most cases, the banks attempt to resolve the issue within 30 days of receiving the complaint but it can also take longer. One must ensure the bank provides the reasons for taking beyond the regular time.

The fastest and the most efficient way to get the case sorted is to check if the grievance can be addressed at the branch level. Locating the person who sold the loan (though difficult) may help sort the issue quickly.

Step 3: Timing the benefits of escalating

One can always escalate the resolution to the following level if he/she is dissatisfied with the one provided by the bank. The Chief Customer Services Manager or the Chief Grievance Officer usually comes into play at around this point. If one continues to be dissatisfied, he/she can approach the internal Ombudsman, who is usually a retired general manager of any Public sector bank other than the bank in question. Each bank mentions the individuals under the internal ombudsman scheme on the website, generally with contact details. Though most complaints belong to the stated terms and conditions’ being different from what was promised, they also register complaints regarding delay in the crediting proceeds of the loan installments, standing instructions, collateral securities, and security documents after satisfactory adjustment to the loan outstanding.

Step 4: Getting external help

There are usually three external ways to assist with dispute resolution. The primary is the Banking Ombudsman, who is an external party and not a part of the bank in question. An individual must approach the officer within one year of the bank rejecting the issue. The names of the nodal officers are again on the Bank’s website.

The second is approaching the Lok Adalat. It functions as a court and believes in the process of negotiation, mediation, and conciliation. It’s also cost-effective. However, one must note that the order passed by the Lok Adalat is final and there can be no further appeals against the order of Lok Adalat.

The third way to resolve loan disputes is through Consumer Courts. It ensures protection under Consumer Protection Act and is preferred because it allows various levels of appeal. Though one can approach the Consumer Courts within two years of the dispute arising. It is an awfully long process.

 Step 5: Do not default

One must remember that the rise of a dispute doesn’t terminate the pre-existing obligations. One must never default in the monthly payment of installments or EMIs. This may go against the customer by harming credit ratings.

Step 6: Keep a cool head

No problem is permanent and in the process of solving it, it’s important to be patient and calm. Anger driven in the wrong direction would not solve the issue and in some cases even prolong it. The vital part is to resolve the issue as quickly and amicable as possible.

If you want to settle your loans with the banks, register and talk to our counsellors.

The post Stepping Stones To Loan Dispute Resolution With Banks appeared first on Loan Settlement.

Here are some of the reasons why a person’s credit score is very important!

Credit score determines one’s creditworthiness

Credit score is used as a quick and highly reliable source by banks and financial institutions to judge an individual’s credit management record. A strong credit score would mean that the lender might be willing to approve a loan with favorable terms and conditions at lower rates of interest. A good score would give them a sense of assurance about the reliability of an individual. Simply put, a person’s credit score mirrors their payment habits.

Later the payment, lower the score

It has been found that a late payment of 30 days could drop the score up to 100 points. The same finding showed that a late payment of 90 days could damage the credit score for up to 7 years and deferring the payment for more than 120 days could “charge off” a person’s debt to a third party and this is further shown in the credit report. It also depends on the type of loan- in case of credit cards the damage may not be as much but if it is a monthly EMI, then the damage could last up to 2 years.

Law of credit score

Credit score and interest rates have an inverse relationship. Higher the credit score, higher the possibilities of the individual’s loans getting approved at lower interest rates. Lower credit score warrants a high interest rate with lower possibilities of the loan approval

A series of late payments is most inadvisable

One late payment, though inadvisable, can be compensated by diligent and prompt payment in the future. But that would not work if a person is a serial defaulter. A continuance of non-payment of loans can damage the credit report to an significant extent. It would be what one calls “digging your own grave”.

Credit score is a person’s reputation

The first thing banks do when a person applies for a loan is conduct background checks with credit information companies. They can know a person’s credit activities along with his/her reputation and reliability to pay back their dues. Hence a good credit score speaks volumes about one’s financial discipline.

Deferred payments and low creditworthiness are not just concerns for the customer but also the lender who relies highly on the credit score and report before approving any loan.

With all that said, here are some ways to maintain or improve your credit score:

• Pay your bills on time- every time. It has the greatest impact on your score. Set reminders or opt for online automatic payment so that you don’t miss the deadline.
• Do not get close to the credit limit. It is the limit that financial institutions extend to any debtor. Experts advise a person to keep the score at no more than 30% of total credit limit.
• A history of credit keeping and paying can go a long way in showing creditworthiness. It improves over time when a person has different accounts and pay what they owe on time.
• It is important to apply only for credit a person would need and nothing more.
• Lastly- make well informed and well planned decisions when it comes to your credit.

If your credit score is down, consider loan settlement. Register and talk to our counsellors for more information.

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Facts of the case:

• The plaintiff, Sh. Bhupinder Sondhi, had approached the defendant bank seeking financial support to buy motorcar Santro in the February of 1999.
• A loan of Rs.2,54,000/- was allowed to the plaintiff. The market price of the said car as of 08.02.1999 had been Rs.3,08,504/- and the plaintiff had paid Rs.65,000/- from his own pocket for other necessary installations in the car.
• The said car was hypothecated by the bank and the plaintiff had to sign several documents for the same. The plaintiff had to pay Rs.6165/- monthly for a period of five years with effect from 08.02.1999.
• The plaintiff had paid an approximate of Rs. 80,000/- till the November of 1999, but due to serious illness of wife and daughter, he had failed to pay the instalments in time till February of 1999. The bank had not taken any step to notify him of the amount due.
• On 29.02.2000, two men had barged into the house of the plaintiff saying that the bank sent them. They demanded the keys and original documents of the car and forcibly and illegally drove it away along with all the belongings inside the car.
• Thereafter, by a letter dated March 20^th, the bank had intimated the plaintiff that they had sold the vehicle and that the proceeds from the same have been adjusted in the outstanding A/c.

Judgement:

The court observed that despite the plaintiff’s offering to give a written undertaking expressing his willingness to pay the dishonored monthly instalments and pay regularly the upcoming monthly instalments, the bank had not paid any heed and had sold the car without any prior notification. It was further noticed from the medical records that he was genuinely unable to pay due to his wife and daughter’s illness. The court ordered the pending and future interest to be offered @ 6% p.a. in favor of the plaintiff. Further a compensation of Rs.30,000/- was awarded towards loss of reputation and mental harassment. The cost of the suit was also awarded in favor of the plaintiff.

Learnings from the case:

It is very important to read and understand the documents that a person signs as a customer. In case of the agreement of hypothecation a creditor cannot forcibly repossess the hypothecated item though they can enforce the same through court. Repossessing the hypothecated goods against the wishes of the hypothecator is taking control of law and is considered illegal.

The post Case Study:Sh. Bhupinder Sondhi v Abn Amro Bank appeared first on Loan Settlement.

• The plaintiff was engaged in the business of printing and desired to purchase a commercial vehicle under hypothecation from the bank. Plaintiff had furnished relevant document in order to get a loan for the vehicle (Tavera) which was worth Rs.7,68,000/-
• The defendant asked the plaintiff for a payment of Rs.40,000/- which was paid on 05.03.2008. However no receipt was ever issued for the same and when the plaintiff went to take delivery of said vehicle, he was asked to further pay an amount of Rs. 1,10,000/- stating that the loan amount was reduced by the bank. Thereafter, he was again asked to pay a total of Rs. 5 Lacs for delivery of vehicle. After the payment the plaintiff took delivery of said vehicle on 11.03.2008.
• It was alleged that the defendant had taken 8 signed cheques in blank along with other documents and the loan was sanctioned for up to Rs.2,58,000/-. It was further alleged that the payment for Rs.1,27,000/- was made to the bank through credit card.
• Furthermore it was stated that one blank cheque was encashed for an amount of Rs.20,000/- on SBI by the defendant and that no statement of loan had been provided.
• In the evening of 31.07.2008, when the plaintiff was returning from Delhi to Panipat, it was further alleged that some associates of the defendant had tried to forcibly take possession of the vehicle. The plaintiff was also being threatened with misuse of the blank cheques.

Judgement:

The court observed as follows “Defendant appearing in the matter had not filed written statement despite several opportunities being given by the Court, therefore, the defense of defendant was struck of.” The court held that the plaintiff was only required to prove a case based on the first impression, which has been considered successfully done in this case. The court restrained the defendant or any associates from taking away the vehicle. They were further order to return the blank cheques and to give the documents of the vehicle to the plaintiff and to deliver the statement of the loan.

Learnings from the case:

Threats against misuse of cheques and sale of vehicle are considered a crime and are thus illegal. It is further illegal to file and encash a signed blank cheque that was not filled by the owner of the cheque. It is very important to read and understand the terms of any contract and to be clear on the facts of the agreement. Under hypothecation, repossession of hypothecated item forcibly is considered illegal. Forcible repossession is advised against by the Code of Conduct that banks need to adhere to.

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The share of small-ticket loans in personal loans has become five times in the last 2 years which were only 12.9% of the personal loan segment. By March 2020, these rose to around 60%.

A credit of below ₹ 50000 is termed as a small ticket personal loan and this segment has been driving volumes, and growth has been as high as 162% in 2019-20. The primary reason is app-based lenders who entered the market in recent times.

Unfortunately, such loans have seen the maximum stress. A credit bureau CRIF High Mark released a report which states that fintech and neo-age lenders are targeting young, low-income, digitally adept customers who have short term credit needs but have limited or no credit history. The high growth and fishy recovery practices adopted by the app-based lenders compelled RBI to issue a stern warning.

One of the salient features of payday loans (repaid once the salary is credited) is the high-interest rates which hover around 15% per month, which provides the opportunity for lenders to operate even when the defaults are around 10%.

CRIF High Mark reports states that the average ticket size has reduced consistently in the last 2 years, declining by 18% year-on-year by March 2020 even when there has been growth in the portfolio.

If you are planning to take a small loan through these new age loan apps, be very careful before you go ahead. Check the terms and conditions and interest rates and evaluate the background of the company carefully. Don’t get into a debt trap with high interest rate loans that seem easy to get but are toxic in the long term.

If you want to get out of the debt trap, consider loan settlement. Register and talk to our counsellors for more information.

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