MAINTAIN CONTACT WITH YOUR LENDER

After your first missed EMI payment, your lender will send you routine reminders for payments as mandated by the RBI and as mentioned in your loan agreement. The reminders will be sent to you through possible channels of communication, including in-person visits from the lender’s representatives. At such a point, it would be wise to maintain contact with your lender to appraise him about your financial difficulties. Not responding to the communication will not make the debt go away. Rather you must communicate with the lender and explore all possible options to make your payments easier. The options may include adjustments in interest rate, loan tenure or EMI size, which may make the payments slightly easier for you. At the same time, you’re entitled to receive humane treatment from the lender, and acts of coercion and violence are against the law. recovered through the auction of the asset. You’re allowed to be part of the auction and claim surplus proceeds if any. In unsecured loans such as credit card debt or personal loans, you may receive a settlement option from the bank: pay part of your principal and interest dues and consider the loan settled. However, this is only a partial repayment, and while it will end your problems with this particular loan, the settlement will reflect in your credit report as an inability to pay your dues in full. This will lower your credit score and make future borrowings very difficult.

Managing your EMIs during financial difficulties is extremely challenging. However, you must plan for these trying phases and keep looking for ways to repay your dues. Full and timely repayment will ensure you continue to get credit in the future.

The writer is CEO, BankBazaar.com