What legal options do I have if I default on a loan and want to pursue a settlement?

Answer

A:

If you have defaulted on a loan and are looking to settle the outstanding amount, there are several legal options available to protect your rights and negotiate a viable resolution. Here’s a detailed overview:

---

 1. One-Time Settlement (OTS) with the Bank

Banks may agree to a One-Time Settlement, allowing you to pay a reduced amount as full and final payment. This is common when:

• The loan has become a Non-Performing Asset (NPA)

• You are unable to repay due to genuine financial hardship

• The bank prefers settlement over prolonged legal action

 Important: Always get the settlement agreement in writing and collect a No Dues Certificate after payment.

---

 2. Legal Protection Under the SARFAESI Act

If the bank initiates recovery under the SARFAESI Act, you have the right to:

• File a case in the Debt Recovery Tribunal (DRT) under Section 17

• Challenge wrongful possession or auction of secured property

• Request a stay order on enforcement actions

---

 3. Loan Restructuring Before or Alongside Settlement

You can request to restructure your loan to make EMIs more manageable before settling. Restructuring can include:

• Lower EMI

• Extended tenure

• Temporary payment moratorium

This may be offered under RBI’s restructuring schemes based on your profile and repayment history.

---

 4. Consumer Complaint in Case of Harassment

If you face harassment from recovery agents or bank officials, you can:

• File a complaint with the Consumer Forum

• Lodge a complaint with the RBI Ombudsman

• Approach local police or the National Human Rights Commission for mental harassment

---

 5. Seek Legal Representation

Engaging a lawyer helps you:

• Negotiate better settlement terms

• Ensure proper documentation and legal compliance

• Respond to legal notices

• Defend against civil suits or auctions

---

 Legals365 Can Help You:

• Assess your loan default case legally

• Draft and send settlement proposals to banks

• Represent you in DRT or civil court

• Protect you from harassment and legal pressure

---

 For expert legal advice and support:
Visit: www.legals365.com
Call: +91 9625961599

Advocate B.K. Singh and the team at Legals365 are committed to helping borrowers resolve defaults with dignity, protection, and legal confidence.

.