Loans are a great way to make a dream, which seems a little far-fetched on your current financials, a reality. A majority of us turn to them to fulfill the dream of buying that latest iPhone, a utility car or our dream homes. But, often an over looming concern grips majority of us while taking that final step in signing those papers. The concern is, whether we will be able to pay those Easy Monthly installments that we’re promising to the bank. However, after giving it a thorough thought and making a promise to yourself to curtail your expenses and pay every installment on time, you go ahead and sign those papers.
So, once everything is done and your loan is approved, you start giving your EMIs. Everything is hunky dory in the first year but unfortunately, due to some reason, you aren’t able to pay the 13th EMI of your loan on time and become a loan defaulter. Here is when you start thinking that the nightmare has begin but stop, that is not the case. You being a defaulter doesn’t give your lender a complete walkover. Here’s a list of five rights you have up your kitty despite being a loan defaulter.
1) Ample Notice- Banks have to follow a proper process and give a defaulter substantial time to repay their dues before starting the process of repossessing their assets to recover the arrears amount. A bank in India typically follows the proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interests (Sarfaesi) Act. According to it, if a borrower’s account is termed as a non-performing asset, that is the repayment is overdue by a period of 90 days, the lender is obligated to first issue a notice of 60-days to the borrower.
If a notice is issued and the borrower is still unable to pay the dues, the lender can legally begin with the sale of borrower’s assets. However, the bank is additionally required to issue another 30-day public notice stating all the details of the sale before beginning the assets sale.
2) Ensure Fair value of assets- When the borrower isn’t able to pay the dues even after the 60-days notice, the bank issues a 30-day public notice giving a detailed value of the secured assets after a proper assessment done by the banks’ valuers. It also releases details like date and time of auction and reserve price etc.
If the lender thinks that his/her property has been undervalued, they can raise an objection about the same and justify it by conveying any better offer that they might have so that the bank can make a decision about the same. A borrower can look for buyers on their own and get them in touch with the lender if they think that the property is worth a better price than valued by the bank.
3) Realise balance proceeds- Keep a close watch on the auction process. Banks are obligated to refund the lender any balance money that there might be left after full recovery of the dues the borrower owes to the lender.
4) Right to be heard- During the 60-day notice period issued by the lender, the borrower has the full right to present himself/herself to the authorized officer and put forth their side of the story. The officer then has to reply within a period of seven days and give a good, valid reason if he has decided to reject the objections and points put forth by the borrower.
5) Right to humane treatment- You being a defaulter, doesn’t give the bank a right to behave with you whatever way they may seem appropriate. The banks will still have to hold up to their best practices as part of their code of commitment to their customers.
Recovery agents aren’t allowed to use the means of intimidation or harassment on the borrower nor their family members. Further, they can legally call the borrower only between 7 am and 7 pm. Also, the agents can only meet the borrowers physically at a place chosen by the borrower. During the entire process, the recovery agents have to adhere to the privacy of borrowers, and ensure civil behavior on their part.
So, if you have taken a home loan for your dream house, don’t worry. First of all, try paying all your EMIs on time and even if once in a blue moon you end up missing the line by a few days, then no need to fret, you still have a few rights up your sleeve which you can exercise.