When feeling low for not having the funds to sort out the impending debts, don’t think that the money lenders “own” you. There are a lot of rights that protect loan defaulters in case of delay in payments. If you are reading this, it is pretty sure that something caused you to delay the payment and is not intentional. While you take your time to figure out a way to solve the crisis at hand, you may focus entirely on it rather than worrying about the banks running all over you. There are a set of rights that may not be mentioned clearly at the time of applying for loans but are very well existent.
You Are Not Doing A Crime
You should be aware that a payment defaulting does not make you a criminal. There are a set of protocols and periods to be followed before the financial institution takes possession of your collateral. They have to let you know much in advance of when they plan to repossess the assets. The defaulter is entitled to a 60 day advance notice period. This is in case the bank declares the borrower account as a non-performing asset. And, when the payment is pending by 90 days the institution proceeds reclaiming collaterals under the rules of Securitisation And Reconstruction of Financial Assets and Enforcement of Security Interests (SARFAESI) Act. In case of delay in repayment within the notice period, the bank may proceed to sell the assets. They still have to declare a 30-day notice in this case as well.
Ensure That The Asset Is In Safe Hands
In case you are unable to pay the loan back within the time mentioned by the banking institution, it will be sold to recover the funds. In this case, the defaulter has an option to introduce a buyer to the bank who will be able to pay a better value. This is the way out if the bank undervalues the asset and tries to sell it at a price which is unacceptable by the debtor. Although, all these can be avoided in case the borrower can clear all the debts within the 60 day notice period issued by the financial institution.
There Might Still Be Hope
If there are valid reasons for defaulting the payment, the borrower can represent his case with the bank to get a relaxation in the proceedings. There is a right to be heard if the reason is justifiable. In case the asset is reclaimed by the bank to make into funds, do not just let it be. Most of the auctions are marked online, and this gives you the information on how much funds are recovered in the process. In most cases, the auction amount shoots beyond what is owed, and the rules state that the bank has to give the excess amount after recovering the costs of the debts and the auction expenses.
Know More About : Gold Loans 101, Everything You Need To Know