What Happens If Personal Loan Is Not Paid In India?
What happens if personal loan is not paid? Is there a punishment for non payment of personal loan? Will the defaulter go to jail straight away?
There will be hooliganism displayed at the defaulters front door by the Banks? What are the bank loan recovery rules?
A person who is under stress due to non-repayment of loan, face further nightmares answering these question. Defaulting on loan payments triggers fear. No doubt.
But it must also be remembered that there are rights of a loan defaulter as well. Banks (lenders) cannot start arm-twisting the defaulter.
In the modern and urban lifestyle of today, it’s impossible to handle all of one’s financial requirements without resorting to loans. Whether you are looking to buy a car, purchase your dream home, start a new business venture, or fund your personal expenses – loans have become an inevitable part of modern living.
Not to forget, certain loans like home loans come with tax benefits, making them a preferred choice for all. However, life is full of surprises. There are plenty of times when things don’t go as per plan. You may lose your job, acquire a critical illness, or meet with a financial windfall making it difficult to continue with your loan repayments.
Irrespective of your current financial scenario, it pays to be aware of the repercussions of not repaying your loan. What happens if you cannot repay your loan? Do you have any rights as a loan defaulter, or are you at the mercy of the lender?
This article finds answers to these questions, helping you be prepared for the worst-case scenarios.
Before, we take a look at the rights of defaulters; let’s clear up a few basic things that you should know:
- Defaulting (the inability to repay a borrowed bank loan) is not a criminal offense in India, unless the courts find out there is a fraudulent motive.
- The court recognizes that defaulters need protection, as there may be a genuine reason why they are unable to pay. Civil courts in India give due weight to genuine, lawful reasons.
- Loan defaults in India are a civil offense. Criminal charges cannot be placed on a person for not repaying a loan. It means, police cannot arrest you because you’re unable to pay back the loan.
However, note that these rules apply only to people with genuine reasons and do not apply to willful defaulters, scammers, escapists, and non-law abiding people.