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.

The post Debt Settlement Companies in India: How to Choose the Right One for You appeared first on Loan Settlement.

• The complainant, Vibhu Bhakru, had taken a credit card from the Opposite Party, Standard Chartered Bank in 1999 and had been very regular and prompt at payments.
• On 24.02.2004 an invoice was sent to the complainant demanding payment of Rs.750/- charged on account of renewal. The complainant requested redemption on the points accumulated under the reward scheme by the bank against the renewal charges of which he was assured.
• The credit card duly expired in February 2004 but he was not issued the renewed card. He made several calls to customer care which were unhelpful.
• In May 2004, he was shocked by a telephonic call from an agent of the bank demanding payment of Rs. 28,000/-. Any explanation that he had not used the card after Jan 2004 had fallen on deaf ears after which he was visited by agents who demanded payment towards credit card usage.
• He filed another complaint with customer care but was again demanded payment of Rs. 28,000/-. After a dispute declaration by the Bank in March/April 2004, the complainant started receiving threatening calls. Despite several attempts to mediate the misunderstanding, he once again received a threat on 11.12.2004 for the collection of a levy of 20% on the outstanding if the payment was not made within 20 days.
• The bank claimed the complainant as frivolous who was filed with intentions of unjustly enriching himself at the expense of the OP Bank.

Judgement

The Commission imposed punitive damages of Rs.10 lacs deposited in favor of state consumer welfare fund and Rs.20, 000/- as compensation towards the complainant for trauma, mental agony, and harassment, loss of reputation and loss of creditworthiness.

Learnings from the case

Banks and financial institutions that provide loans and credit cards are not to resort to methods that have no legal back up. They are not to use abusive and threatening languages on the telephone and are most certainly not to visit the residence of consumers. They should keep a record of all the transactions between them and the customer and not demand unfair compensation.

The post Vibhu Bhakru v Standard Chartered Bank appeared first on Loan Settlement.

An important feature of credit cards is the option of paying minimum amount due. If any individual falls short of funds, they can pay the minimum amount offered on the credit card and avoid penalties. However, it is easy to fall into a debt trap if one uses this facility for a long time.

What is minimum amount due?

It is the minimum amount that a person is required to pay on or before the due date of payment to maintain the card account. Minimum amount due is usually calculated at 5% of the outstanding balance. Any unpaid amounts from previous bills also get added to the current minimum amount due. It also gets higher if the cardholder bought something on EMI through the card or spent more than the credit limit.

Most credit cards charge an interest rate of 3% per month which is equivalent to 36% annually. Banks keep levying interest on the outstanding amount left after the payment of the minimum amount. Since the interest rate is very high, most of the minimum amount paid goes towards interest charges and the outstanding amount is reduced marginally.

Let us take an example. Say an individual has an outstanding balance of Rs.50,000 and pays the minimum for each month- the minimum amounting to at least Rs.2000. In this case, it will take a minimum of 44 months for the entire outstanding amount to be paid in full, assuming that there are no more transactions done on the card.

Though the interest on the bill outstanding amount is not waived, minimum amount helps one avoid late payment fee which usually ranges between Rs.100- Rs.1000.

If an individual chooses to pay the minimum amount due, they do get temporary relief but a habit of paying minimum amount every month will result in the total bill multiplying quickly.

What happens if a person chooses not to pay the minimum amount?

A person choosing not to pay the minimum amount of due will be charged an additional fee, interest, and other charges. There may also a possibility of suspension of the card when the dues cross the credit limit. Not to mention that the effect on the creditworthiness and the credit score will make it harder to get loans in the future.

Paying the minimum is okay if it is for genuine reasons and used once in a while. Ideally one should not use more than 50% of their credit limit in a month as credit card spending usually comes with a risk of overspending and it is easy to fall int a debt trap.

Want to get out of debt trap? Register and talk to our counsellors for credit card settlement

The post Minimum Amount Due (MAD) On Credit Cards – Good or Bad for You? appeared first on Loan Settlement.

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.

The post How to pay your EMIs in difficult times appeared first on Loan Settlement.

• Complainant, Tapan Bose, had taken a loan of Rs. 3,40,749/- to purchase Maruti Swift, from the opposite party, ICICI Bank.
• The opposite party had already taken post-dated cheques, so the monthly installments were paid on time. A few installments had been collected through ECS and cash as well.
• After 3 different cheques had bounced, the complainant paid only through ECS or cash. He had been further unable to pay for 3-4 months due to instability in business. He never received any notice regarding the irregularity from the opposite party until 15.01.2007.
• The complainant on 08.01.2007 had visited the DDCA club along with one Vinod, who was the son of the complainant’s friend.
• Vinod, who had insisted on staying behind, was directed by a person claiming to be from ICICI Bank, to reverse the car. When he asked for the reason, he was dragged out of the car and slapped. The first person was joined by three others who beat Vinod with rods that had induced injury to his skull.
• The goons had then, driven the car away. Any effort from Vinod to stop them had resulted in further injury and harassment. The complainant, who had come out to check on Vinod following a missed call, had found him lying on the ground some meters away from where the car was parked.
• Vinod was rushed to the hospital and the complainant paid for his treatment. The complainant filed an FIR. He claimed Rs. 21,00,000/- and Rs.20,00,000/- for himself and Vinod respectively for mental agony, emotional sufferings, humiliation, and harassment. He further claimed Rs. 50,000/- for the hospital fee.
• The opposite party denied involvement saying they weren’t responsible for the acts of the collecting agency or its methods.

Judgment:

The Commission held that the opposite party and the agency were both liable in the case. The complainant was granted compensation of Rs. 5,00,000. The Commission directed the bank to return all the post-dated cheques. They were directed to pay punitive damage of Rs. 50 lacs. as a deterrent for their audacity and impunity.

Learnings from the case:

Banks are liable for the acts of their employees or collecting agents engaged in a contract with them. They have to strictly comply and abide by the code of conduct laid down by the RBI in collecting the installments or getting into contact with the customer for any other engagement. Any conduct against these rules is considered immoral and illegal.

The post Case Analysis-Tapan Bose v ICICI Bank appeared first on Loan Settlement.

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.

The post How to Deal With The Loan Recovery Process  appeared first on Loan Settlement.

• Complainant, Suresh Kumar, had taken loans of Rs.8,50,000/- and Rs.4,85,000/- from the Opposite Party for purchasing trucks to earn a livelihood through self-employment.
• Despite regular payments of the monthly installments, the complainant claimed that the opposite party had employed hooligans for forcible repossession of the truck that was delivering perishable goods. The purchaser had raised a condition that non-delivery of goods would allow him to a full claim of Rs.3,00,000/-
• Compelled under the circumstance, the complainant signed blank documents. Instead of returning the vehicle, the opposite party sold it at a discounted rate. The complainant alleged his repeated demands to return the vehicle were also ignored. He filed a complaint at the District Forum and sought compensation.
• The opposite party questioned the jurisdiction of the District Forum and claimed that the complainant wasn’t a consumer as he did not drive the truck personally. Despite oral as well as written notices, they further claimed that the complainant had continued to default after initial payments.
• By a letter dated 05.01.2015, the opposite party had asked the complainant to deposit an amount of Rs. 5,16,000/- before selling the vehicle.
• The opposite party declared the complaint as “totally wrong, baseless and false” and claimed recourse by repossession of the truck.

Judgement:

The District Forum concluded that it had jurisdiction over the case as the opposite party carried out business for the complainant from the same jurisdiction. It further found categorical evidence that the complainant used the vehicle for livelihood through self-employment and was thus concluded to be a consumer. As opposed to the claims of the opposite party, the complainant had defaulted only once.

The District Forum directed the opposite party to pay compensation of Rs.3,00,000/- along with interest @ 12% and Rs.10,000/- towards litigation costs.

Learnings from the case:

Debts usually become bad if it hasn’t been paid for three consecutive months. Before appointing recovery agents, the lender must check to see if the payment was forgotten or if it was unavoidable. They must also give sufficient time and notice before appointing agents to the client. Any other method to settle loan would be against the code of conduct laid down by the RBI. Appointment of hooligans and compelling the consumer is also against the policies laid down by the RBI.

The post Case Study: Cholamandalam Investments v Suresh Kumar appeared first on Loan Settlement.

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.

The post Credit Score – How It Makes Your Credit Soar Or Sore appeared first on Loan Settlement.

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.