Can't Repay your loan

Can't Repay your loan?? Talk to your lender at the very earliest opportunity. They willl want to consider your individual situation. If they reasonably believe your financial situation may improve, they may be prepared to suspend loan repayments for a while, or extend the term of the loan.

In the final instance, a lender can insist on the debt being repaid. They will want to determine whether you 'can't pay' at this time, or whether you simply 'wont pay'. If your loan is secured on a major asset such as your home, you could be forced to sell it to repay the debt. Even if the loan is not secured on a specific asset, the lender could nevertheless sue you to recover the debt. If you lose, the net result might be the same - you may have to sell your property.

Ashok Kargutkar, a counsellor at Abhay, a debt-counseling centre,  says, "If someone can’t repay because they are genuinely short of funds, we help them to try for a settlement with the banks. Many a time, banks have settled genuine cases."

The operative word is 'genuine' and if you prove that your case is so, then banks may settle. So, how do you prove this?

1. You need to show relevant documents to prove that you are bankrupt, and cannot pay the outstanding amount. Also, submit an affidavit that states you have no assets that you could use to pay back.

Declaring that you have gone bankrupt in the court (after consultation with your lawyer) could also prove to be helpful.

2. Your entire debt will not be foregone even if you file for bankruptcy. You will have to pay a mutually agreed (between you and the bank) amount, which can be less than the initial outstanding amount because.  

“The settlement amount will largely depend on your ability to pay as well as the bank’s policy towards such cases,” says a senior bank official.

3. In some cases the bank may extend your repayment period and break the outstanding amount in equal monthly installments to facilitate repayment.

4. If you have credit card debt where the interest rates are 45% per annum, you could go for a cheaper loan -- a personal loan.  

5. If you bank agrees to a 'settlement', you could further request for an  extension of the duration of repayment.

If the bank won't settle
Despite declaring bankruptcy if recovery agents and banks continue to harass you, you can approach debt-counselling centres, like Abhay (a trust funded by Bank of India) and Disha (supported by ICICI Bank).

These centres have a three-fold focus: financial education, credit counselling and debt management. Kargutkar says, “Most people are in debt because of reckless spending habits. We ask them to discipline their spending and manage assets to pay off debt."

" For those with genuine problems, we first guide them. If banks and financial institutions are unresponsive, we take it up with respective authorities.”

“The best option,” Ashok suggests, “is to stick to your budget, never spend beyond your means and be financially aware.” 

The contact details for these centres.

Abhay 

- In Mumbai

Address:
61 A, Sadanand, 1st floor
Above Bank of India, Gokhale Road North
Dadar
Mumbai -- 400 028

Contact person : Shri V N Kulkarni
Phone: (022) 24221843

- In Chennai

Address
C/o Bank of India
104, Sir Theaogaroya Road
Pondy Bazar, T Nagar
Chennai -- 600017

Contact person: Shri M K Raghunathan

Phone: (044) 28152669

Working hours: 6 pm to 8 pm on every Friday, Saturday and Sunday

Web site link: http://www.bankofindia.com/home/abhay.asp

Disha

- In Mumbai

Prince Apartment
Ground Floor, Karani Lane
Ghatkopar (West)
Mumbai -- 400 076

Phone: (022) 65971815/ 16/ 17

e-mail: info@dishafc.org

Thanks and Regards,
Renu Yadav
CUG:2617
Testing Services Group(TSG)
Xansa India Limited
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