Things to Keep in Mind for Personal Loan Recovery

A Personal loan provides financial aid to people for fulfilling urgent financial requirements. However, like any other loan, the borrower has to pay back the loan amount to the lender bank within a set time period. Sometimes, it becomes very difficult to pay back the loan due to the regular shortage of funds.

But, there is no option of not returning the money you have taken from the bank through a personal loan. Banks have specific agents who contact the borrowers for personal loan recovery in case the borrower hasn’t paid the EMIs in the prescribed time limit.

As we know “prevention is better than cure”, so you should understand the whole procedure of personal loan recovery before applying for this loan. Knowing all this is essential for you as you can be the one facing this situation after borrowing money through a personal loan. Read on to know a few things which every borrower should know about personal loan recovery:

1.Bank will send Notices and Reminders:

Usually, the lender bank let one or two EMIs slip by thinking that the borrower may be facing some issues in paying off the EMIs. But, if a borrower didn’t pay the EMIs for three consecutive months, then the bank sends a notice to the borrower to remind him about the loan he has taken and the EMIs which are due.

In this notice, the bank demands the borrower to clear the pending EMIs as soon as possible. Now, if the person didn’t pay the amount even after 90 days, then the bank marks them as a non-performing asset (NPA). Becoming an NPA is very harmful to a borrower because they won’t be able to take any credit in the near future with this tag.

2. Bank will send Loan Recovery Agents:

The next thing lender bank will do is sending recovery agents to check on you. These recovery agents can visit your home or workplace to talk to you and enquire about the reasons for missed payments. These agents are well-versed in polite communications and extracting money from the defaulters.

Handing these recovery agents isn’t easy because they have a fixed target and they can do anything to achieve it. But, as a borrower, you also have some rights, and the recovery agents can’t go beyond a line. However, many people don’t have any knowledge about these rights, so; they become victims of regular pressure from these recovery agents. You can be saved from it by understanding your rights as a debtor. Let’s see these rules:

Identity

You can ask the recovery agent to show their identity card to check that they are authentic agents or not.

Privacy

Every debtor has a right of privacy; which means that any recovery agent can’t tell anyone else about your debt or default without your permission. If the recovery agent threatens you to tell your neighbours or co-workers, then you should not fear as you can take legal actions against such agents.

Timings

The set time in which a recovery agent is allowed to contact you is between 7 AM to 7 PM. The agent can’t disturb you apart from this time. But, if a person is avoiding the agents knowingly by not taking the calls, then the agent can visit beyond this time limit as well.

Place of meeting

You can choose the place of meeting with the agent. If you aren’t comfortable with him coming to your workplace, then you can tell him and give him another time to meet. You hold this right until you start avoiding the agents purposefully.

Decency

The recovery agent has to maintain decency by talking in a civilized manner. You have the right to take action against the agents who use abusive language and give unethical threats to you.

Inappropriate occasions

You hold the right to decline meeting with the agent on inappropriate occasions like the death of someone or any accident.

3. Bank can take Legal Actions:

The lender bank can take legal actions against the defaulter in case the person hasn’t paid any EMIs in the last 90 days. The bank holds the authority to send the court notice under section 58 of the negotiable instrument act. You must keep in mind that there is no way out after the bank has taken legal action. It’s a punishable offence, and you will have to face severe consequences.

4. Loan Defaulter can’t be Arrested:

Not every loan defaulter is an over-smart con man. Some of them are genuine people who just fell in the debt trap due to their financial problems. So, such people should not fear to go to jail due to loan default. If any agents or any person from the bank give you this type of threats, then you can take action.

You must know that defaulting on a loan is not a crime, but a civil dispute. It means that no one can put criminal charges on you and police can’t arrest you for the same. You can negotiate with the lender bank or can share your genuine problems without any fear of getting arrested. Yes, you can get punishment, but that too after the court hearings and the whole procedure.

5. Collateral will be Affected:

Collateral is used as the last option by the lender in case of secured loans. If the borrower is unable to pay off the remaining amount under any circumstances, then the lender bank can recover it through the collateral.

For example, if you have given your property for collateral security and you are unable to pay back the loan, then the lender will become the owner of your property. The bank can sell this property to anyone without your permission to recover the amount.

So, getting information on a personal loan recovery is very significant for every borrower. God forbid, but you can be in that situation. This information will help you in dealing with bank recovery methods at that time.