How Can Borrowers in West Bengal Resolve Loan Settlement Disputes Legally?
Loan default can impact you and everything around you. Whether it is keeping up with the house payments the salaried individual may be worried about getting his salary cut and the business owner may have trouble keeping up with the demands of lender in Kolkata.
Loan settlement West Bengal is one of the options available for borrowers that qualify to apply for it. There are however times where loan settlement cannot be applied. There are options such as One Time Settlement (OTS), Loan restructuring or you can negotiate to pay your loan in installments/ Respond to legal notice / initiate appropriate legal action. These options are based on your type of loan and what hardship you have suffered and where your loan stands.
Loan settlement agency in West Bengal helps borrowers who are seeking loan settlement. We guide you through the various options available to you, documents you need to provide and communication with your lender. Each case is different and the course of action is decided once we see your documents.
In this article we will help you understand what options are available to you if you are struggling to pay off your loans in Kolkata, Howrah, Durgapur, Siliguri, Asansol and other cities in West Bengal. We will also help you understand some of the traps you need to know about when it comes to loan settlement.
Why Should You Consider Loan Settlement In West Bengal?
Borrowers come from different backgrounds. Some are salaried individuals who might live in Kolkata or Howrah. Some might trade goods in their local area. There might even be self-employed individuals who own a transport business. Small scale manufacturers and businessmen in cities like Durgapur and Asansol. There are various reasons that can cause a person to not be able to pay back a loan which was easily manageable.
Your salary could have gotten cut or you may have lost your job completely. Loan will keep charging you penalties as your lender deems fit. Once your loan is classified under a default. Your lender can begin reporting your details to credit bureaus. Also recover the loan from you as stated in your loan contract and as per laws. If you have taken a secured loan your lender can seize the property you put up as security.
A borrower needs to understand the difference between. Settling a loan. vs Taking a legal route if wrongful recovery has been done.
Reserve bank of India has laid out rules for Compromise Settlement. The document was issued on 8th June 2023. All Bank and Regulated Entities must have provisions to perform a Compromise. Settlement with the borrower
This does not mean that every borrower can settle a loan.
The best way to handle your loan is to first know how much your owe and what the lender is willing to provide you with. If you have received any legal notice respond to them in the given time.
Quick Facts
- Loan Settlement should only be used if you owe a loan.
- If you do a One Time Settlement you might end up paying less than what your lender says you owe.
- All banks and financial institutions have their own policies on when they can and will settle a loan.
- You can ask your bank to restructure your loan. If you are able to pay.
- Loan settlement does not stop your lender from recovering your loan or start auctioning your property if it is secured. Just because you have applied.
- Your loan will be marked as settled on your credit bureau report. Not as full paid or closed. This could affect your future loans
- Make sure you get the terms of your settlement in writing before making a payment to your lender.
Understanding Loan Settlement and how it works? !
Loan settlement is when your lender agrees to let you settle your loan. They may allow you to clear your debt by giving you certain terms. Your lender may even allow you to pay less than what they believe you owe.
Make sure the loan your are settling and the amount you owe is clearly mentioned on your loan settlement terms.
If you owned a transportation business in Siliguri and were running smoothly but suddenly your business partner left you. Leaving you with the bills and loans he also contributed too. You can’t pay off the full loan because it’s too much but you can offer a lumpsum to pay off your loan. You can write to your bank with your offer and attach documents that can help your case.
The bank will review your request and decide whether they want to accept your offer. They might even offer you a better solution to clear your debt.
Technical write off and Loan settlement are not the same.
If your lender technically writes off your loan. It means they are accepting the loss of your loan. They will mark it as written off in their books. RBI has stated that both are separate terms. They do not go hand in hand.
Loan Settlement Options
If your looking to settle your loan in West Bengal you have a few options available to you. You may require to use all of them or maybe just 1 or 2. We will go over them and what they mean.
One Time Settlement (OTS)
If you are unable to pay your lender the full amount you owe them. You can offer a lumpsum to your lender as payment to clear your dues. Always provide a reason as to why you can’t pay more than your offering. State clearly how much you want to pay and when you can pay it by.
Banks will assess your situation and decide if they want to accept your OTS. They might not accept your OTS request because they don’t see it feasible.
Loan Restructuring/ Renegotiate EMI
If your situation is only temporary and you think you will be able to start making payments in the future. You should look to restructuring your loan or renegotiate your EMIs. Call your bank and see if they allow loan restructuring. If your bank allows loan restructuring. You can negotiate with your bank to lower your instalments or give you more time to pay back your debt.
Don’t assume that your EMI’s will be paused just because you requested for Loan restructuring.
Communicate with your bank/NBFC
You can always directly communicate to your lender if you’re able to. Most banks have a department that deals with loan recovery. Or you can try talking to your branch manager. If your story is valid they might accept your offer. They might also give you a better offer that you can consider.
Make sure to get copies of any communication you have with your bank/NBFC. If you have requested to restructure your loan or want a loan settlement. They might offer you an amount that works for you. Make sure you read the terms before accepting their offer.
Reply to any Legal Notice
If you have received any legal notice from your lender. Whether it’s an informal notice or Demand Letter/ Arbitration Notice/ Notice of motion filed from Court or Notice served to you. Evaluate if you need to take legal action against your lender. Maybe they added on extra charges. Maybe you have made payments to them and they haven’t received it. Or maybe the legal notice has been forged. There are many situations that can arise from these notices. Its best to contact a legal professional if your matter is of serious nature.
Just because you have applied for Loan settlement doesn’t mean you can avoid replying to a legal notice. This will have adverse effects on you and is not something you want.
Understanding Loans and Laws
Different loans have different rules and regulations tied to them. Here are some information regarding loans and rules you need to know.
Loan Settlement Rule
This rule was created by RBI regarding loan settlement and technical write offs. Any Banking or Regulated entity comes under this rule. This means they have to follow the guidelines set by RBI. Such as who can conduct these settlements and how to go about it. It also covers cases where loans can be settled while having a case in court.
Just because this rule tells banks and NBFCs on how to handle loan settlements. Doesn’t mean you can ask your bank for less money. You still need to look at what your lender allows before making a loan settlement application.
Section 13 of SARFAESI Act 2002
If you borrowed a loan from a lender/ creditor and provided them with security. That loan is subjected to Section 13 of SARFAESI ACT 2002 if you default on your payments. If you receive a SARFAESI 13(2) notice you have 60 days to clear the amount asked by the lender. If they proceed with Section 13(4) of the act.
You have the right to contest it under Section 17 at the Debt Recovery Tribunal.
Although applying for OTS will not stop your lender from taking action against you under Section 13(4). If your property is at risk you can always consult a Lawyer. Provide them with the dates and when you received the notice from your lender.
Courts
If your lender has taken you to Debt Recovery Tribunal. You can continue to communicate with them if you want to settle your loan. Or if you want to contest it, that is entirely up to you. Just because you send in an OTS application to your lender. Does not mean you can ignore court proceedings.
Communicate with your lender and ask them what you need to do to have your case closed. Make sure you get a proper documentation that states your case is closed.
Who can benefit from Loan Settlement?
Loan settlement can be used by most borrowers. Some examples of borrowers who may need help with loan settlement are
- A Person who use to work for a company but now either makes less money. Or they lost their job causing them to have more expenses each month.
- Self-employed individuals or small scale businessmen. Who can not keep up with the EMI that they were once fine paying.
- Anyone who has had credit cards loans or personal loans. And have found it difficult to pay off all their debts.
- Anyone who has received any type of legal notice and would like to know what options you have.
- At anytime someone can ask for your proof of loan repayment. If you where a Guarantor for someone’s loan and are now been asked to pay for them.
If you can keep up with your EMIs then Loan restructuring might be a better solution. Or if you know you will be able to pay back your lender within time. Then you don’t need to apply for loan settlement. Read through your situation first before taking a course of action.
Applying for Loan Settlement
If you have understood that you need help with loan settlements. You might be wondering what you should do to apply. Here are some basic steps to follow when wanting to settle a loan.
Understand your Loan
Firstly you need to know how much your loan owes. Take out all the documents related to your loan. Loan sanction letter, Loan Agreement and your current loan statement. Verify if your loan amount matches with what you think you owe. If you believe there is incorrect information with your loan. Mention it to your lender in writing before you agree to any offer.
Understand Yourself
Once you know how much your owe. You should understand if you’re able to give them an amount that you can pay. Don’t go and take out another loan to give them a higher amount. If you can’t pay the amount within the time they have provided you. They will not accept your application or offer.
Identify What You Want
Do you just want to reduce your EMIs because you can’t afford your current EMIs? Or would you like to settle your loan and have sent in your OTS application.
Communicate in Writing
After you know what you want you should contact your lender. Provide them with a reasonable explanation as to why you can’t pay. And provide them with the offer you are able to give them. Keep copies of any communication you provide them.
Once you’ve submitted your loan settlement application or negotiation. Make sure to understand what your lender is offering you.
Clear your debt
Once you have agreed to an amount. Pay your lender the amount you have agreed on. Keep all documentation and receipts safe. After you have paid your lender. Ask them for a letter stating you have settled your debts and there is no more obligations you need to fulfil. Since your loan is most likely in court you will need that letter.
Check with your Credit Report
Since your loan will be shown as settled. Check to make sure your creditor has filled out the proper information. If there is some wrongful information on your Credit bureau report. Provide them with the documentation you kept.
Documents required for Loan settlement.
Documents You Need to Provide
- Loan sanction letter and Loan agreement when you took your loan.
- Your loan statement and EMI’s.
- Bank statement of income and expenditure. This shows where your income is coming from
- Did you lose your job? Provide them proof if you have.
- Do you own a business? Show proof that you’re making less income than you used to.
- Attach any medical bills or anything that can help support your case.
- Previous Loan settlement application (if you have applied before)
- Any kind of recovery letters or notices you’ve received.
- Did you provide any collateral or had a Guarantor? If so provide their details.
- If you’ve received an offer or have payment receipts. Provide those too.
These are some documents you will need. You may have other documents that could help you. Which you should definitely provide to your lender.
How Long Will Loan Settlement Take?
Loan settlement takes as long as your bank wants it to. They are not bound by any time limits to accept your OTS. Since your loan has been given to their loan settlements team. It might take a while to get a response from them. If you received a Notice from your lender. Do not wait for loan settlement team to accept your request and reply to the notice.
Your lender may give you time to pay. Make sure all agreements are in writing. If you cant pay within that time. Request for an extension by writing to your lender. Never assume they will grant you one.
If your loan is secured and has been passed to the court/ DRT. You should stay in contact with your lawyer and keep yourself updated.
When to hire a Lawyer?
Just because you hired a lawyer does not mean you will win your case. If your lender has denied your request and you owe more than what you thought. Maybe you have a guarantor and they are now being called to pay off the debt. Or maybe you feel something wasn’t right with your recovery process. Feel free to contact us through our website and we can advice on what you should do next.
You might have too many loans that have gone into default. You don’t have the money to pay back all of them. Contact us and we can help guide you on what you should do. Consider hiring a lawyer if you need one. The Loan Settlement Agency does not provide legal services. If your matter requires a lawyer we will let you know.
How Can We Help?
We can help assist you with your Loan settlement. You do not have to reside in West Bengal for us to help you with your loan problems. Give us a call or contact us through our website. We can help you with OTS Applications. Help you gather documentation you need and help with Recovery Issues. Let us know how you would like to settle your loan and we can go from there.
Frequently Asked Questions
1. Is Loan Settlement Possible In West Bengal?
Everything is possible if two parties can come to an agreement. If your borrower can meet there terms they can agree to a settlement with there bank.
2. Will Bank Accept One Time Settlement(OTS)?
If you give them a proposal on how much you can pay them and what your circumstance are they may or may not except it.
3. How Do I know if I can settle my personal loan?
If you're in Kolkata you can give your bank/NBFC a call and ask them about there loan settlement. They will inform you on how much you owe and if your loan has a settlement.
4. Does Loan Settlement hurt your cibil score?
Yes if you decide to apply for a loan in the future they may deny you because of the loan. It also depends on how the loan will be marked.
5. Can Bank Reject Me For Loan Settlement?
Yes bank can reject you whenever they want but if you believe you can settle with them than let them know your situation that you may not be able to pay them much.
6. Will loan settlement stop harassment from recovery agents?
Once you have sent in the settlement to the company you can always tell them you will pay once my payment is processed and complain about there behavior.
7. What Documents Are Required For Loan Settlement?
Loan Documents, Bank Statement, and any document that might help you case along.
8. Can I do loan settlement if i get bank notice?
Yes when ever you receive the bank notice. You can always contact them and see if you can do a settlement on your loan. Just know when your deadline is.
9. Can Loan Settlement Stop Bank From Auctioning My House?
No just because you did a onetime settlement will not stop the bank from auditing your house if your behind on your payments consult your attorney.
10. Will Loan Settlement Agencies Get Me Out Of Debt?
Loan settlement agencies will help you learn how to talk to your bank to better help you out with you situation and documents. Your outcome will vary on your situation and what they decide.
Final Thoughts
There are lots of avenues you may be able to take if your loan is becoming unmanageable. This will also depend on what sort of loan you have and how far in the recovery process your loan is. OTS may be suitable for you if you can afford a settlement amount. Loan restructuring may be suitable if your loan can be paid under certain terms.
Always read any notices you receive. Don't listen to offers over the phone and don't send any money if you are not 100% sure on written terms. If your case involves enforcement of property or Tribunals, contact a solicitor ASAP.
Loan Settlement Agency can help you with these steps. We can find you settlement solutions based on your circumstance and organise documents. After we have assessed your situation you can decide if you would like to take any action.
