Loans for people with bad credit

In today’s day and age, it is not difficult to avail bad credit loans. Loans for people with bad credit are offered by a host of lending platforms on the internet. When your personal loan application is approved by a lender, you automatically enter into a mutual agreement to repay the loan amount, along with the interest cost within a stipulated amount of time. However, one might be unable to do so due to unforeseen situations, such as sudden loss of employment, medical emergencies, a dearth of funds, etc. While one must try and avoid defaulting on a loan, here are 5 rights of a loan defaulter you should be aware of:

Right To Extended Time
When someone defaults on a loan, they do not immediately fall into a debt trap. Any lender, whether it is a bank or an NBFC, is bound to follow the process and provide the borrower with enough time to repay their dues before the assets are seized to clear the arrears. Even after the extended time ends, the lender cannot seize collateral immediately, as they are supposed to grant the borrower with a grace period of 60 days. These rules are in accordance with the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interests Act. Also, the lender is required to issue a 30-day public notice before selling off the assets.

Right To Be Heard
If you default on a loan, you have the right to visit the bank in order to discuss or restructure the same. As lenders also prefer repayment as opposed to the seizing of assets, they will be more than willing to listen to the reasons behind loan default, provided they are legitimate. You can present your case within the notice period and state why your assets should not be realized. The concerned officer is liable to reply to your statement within 7 days from receiving the notice and provide a valid explanation for asset acquisition.

Right to Ascertain Value
As stated above, if the borrower is unable to repay their dues after the 60-day notice period, the bank is entitled to seize the borrower’s assets to clear the dues. However, before doing the same, the lender is required to issue a legal notice specifying a fair value of the asset, which is to be approved by the borrower before the auction. In case the borrower feels that the asset is undervalued, he/she can contest the current auction by bringing in a better offer.

Right to Information
A loan defaulter has the right to information, wherein he/she can keep track of the auction process. They can also make sure whether the asset is being sold against an appropriate valuation. Even if your assets are repossessed by the lender, you hold the right to modulate the amount received via realization. Since most auctions are conducted online, it becomes easier for borrowers to oversee the auction process.

Right to Humane Treatment
As all banks and NBFCs are regulated by the Reserve Bank of India, they cannot act like typical moneylenders while collecting their dues. The conduct of recovery agents should be polite and humane, as any kind of aggressive behaviour is not to be tolerated. A recovery agent needs to abide by these rules:

  • agents can meet borrowers at a place chosen by the latter party
  • if a location is not specified, agents can visit the borrower’s residence or workplace, on the condition that they behave in an amicable manner.
  • agents cannot meet borrowers beyond business hours, which is between 7 AM to 7 PM.
    agents do not have the right to humiliate, threaten, or intimidate the borrower or their family.

If you have recently defaulted on a loan, keep these rights in mind. Potential borrowers should also be aware of these rights, although it is best to pay off your dues on time in order to avoid any sort of hassle.