Every Loan Defaulter Should Know His 5 Rights

A loan is surely a great way to get financial support in a middle-class man’s day-to-day life. It can really help an individual to grow his/her business or help him fulfil his dreams of buying a new house or a car. Human life is filled with unforeseen uncertainties, which can include anything from medical expenses to car repair expenses, to any urgent business-related expenses. But sometimes the high loan interest rates can really become a burden. Most of us don’t think about becoming a defaulter while applying for a loan. But sadly sometimes, the situation can take a bad turn and be disabling the borrower from repaying the loan. So, in order to help you in such an unfortunate situation, we listed a few rights which can be used by Loan Defaulters. 

5 Right which all Loan Defaulter should know about 

1. Right to be treated in as a Human

Just because you are a loan defaulter now, doesn’t mean that you have become a criminal. You are just like any other human and deserve to be treated respected as a humane manner. Some banks can treat you very rudely, which no one should entertain. Obviously, your creditworthiness and financial condition were stable, when you applied for the loan.

Recovery agents are often trained to get out money out of defaulters in a violent manner, you shouldn’t be afraid to file a complaint about such behavior. 

2. Right To Get an Adequate Notice

It is mandatory for all lender or financing institutions to give a notice period to the borrower before acting upon the issue, in order to let the borrower make any arrangement for repaying the loan. This rule applies to all types of loans including secured and unsecured loans, which can include home loans. In the case of secured loans, the bank is supposed to wait till a particular time, before putting the secured asset or property of the borrower in the auction.

In case the borrower’s asset is classified as Non-Performing Asset, he/she will be given 90 days overdue in which they will have to make a 90 day EMI payment regularly. 

3. Right to Getting Grievance Heard

The borrower is allowed to put forward his objections, against the auction or even for repossession of his/her collateral, during the notice period of 60 days, which is provided by the bank once the borrower is said to be a defaulter. According to the rules, the lender has to consider these grievances and provide an acceptance or a rejection to borrower’s objection, within 7 days before going ahead with the proceedings of the auctions. If your bank fails to give you a reply and auctions your property you can take it to the court.        

4. Right to Receive Fair Value from the Auction

Understand that you have extended rights beyond the repossession of your collateral asset. Before initiating the auction the bank is supposed to issue a notice to the borrower, which should state the market value or the fair value of the asset, which is decided by the bank’s evaluator. This notice should also contain all the additional information regarding the property price including the reserve price, and date of the auction. If the borrower feels that his/her property is undervalued by the bank than they can a demand a better offer or even bring prospective buyers to the bank’s door. You can always seek legal help if you think that the bank is over playing with your asset. But considering that you are a bank defaulter it’s unlikely that you have the funds to actually hire a lawyer. You can always the internet to know more about your rights to help you get a fair value of your property.

5. Right to Balance Auction Profits

If during the auction, your property is sold at a higher price than you initial loan amount (Principal Amount + Interest Rate) then the borrower has the right to demand the extra share of the money that he also deserves legally. So, don’t feel afraid of asking for that money as all that excess amount is entitled to me in your bank account, not your bank.

Most people don’t follow these auctions and end up losing this money. So you better follow the full auction proceeding, to ensure to claim the balance amount which you don’t owe to the lender. Avoid signing any documents or loan clearance papers before the auction as it might take away your rights to claim for the auction amount which exceeds the loan amount.

Conclusion

These are some of the most helpful tips which can really help of getting something out of the auction. Auction money is usually the last hope in such cases, as the defaulter has already lost all his assets and money. So don’t feel afraid, take all the legal help that you might require. You can go through banks policies if you that you are being exploited.