It is your Pay Day. But on the 5th of every month, your heart skips a beat as soon as the messages for the repayment of your loan EMI chime in, immediately followed by the anxiety of potential Bank Harassment if you miss a payment.
Sounds familiar, doesn’t it?
Let us decode, de-clutter, and de-mystify the air around the three-letter word “EMI” and explore your options when panic sets in.
Understanding Your EMI Burden
EMI or Equated Monthly Instalment in layman’s terms is a fixed sum that a borrower pays every month to the lender to repay a loan or a large purchase. This monthly payment includes both the principal loan amount and the interest charged by the lender. It is a structured and manageable way to pay off your debt over a long, fixed period.
Financial Literature as well as reason dictates that one keeps one’s EMI Burden below 25% of their net monthly income. This avoids the scenario of perpetuating a debt-trap, a vicious cycle wherein you avail one loan and then another bigger loan to repay the existing loans.
When Financial Shocks Hit: Finding an Avenue
But what happens in the event of encountering roadblocks such as a sudden shock to your wallet caused by some family emergency?
One might have to explore Loan Settlement as an Avenue in an unforeseen event such as genuine reasons like facing job-loss, a medical emergency, or family commitments.
The path to a safe financial future then seems to be through arriving at a Loan Settlement Plan. It is perfectly legal too.
Legal Loan Settlement involves negotiating with your lender to pay a lump sum that is less than the original outstanding loan amount.
But rather than defaulting on your loan repayment commitments, it is a much brighter path than leaving your lenders high and dry. (Talk about taking the high road).
Demurrer: Loan Settlement should be considered a last resort for reducing your EMI burden due to its effect on your CIBIL rating (an indicator of your creditworthiness trusted and scrutinized by nearly all banks and financial institutions before giving you a loan).
Your Rights Against Bank Harassment
The stress of repayment is one thing, but dealing with aggressive recovery agents is another. Remember, even if you are struggling with payments or discussing a settlement, you are protected from Bank Harassment.
- You Have the Right to Dignity: No lender or agent can humiliate, threaten, or insult you or your family.
- Know the Contact Hours: Collection calls must only be made between 7:00 AM and 7:00 PM. Calls outside these hours or repeated, incessant calls constitute harassment.
- The Goal is NOT to be Crippled: The goal is to keep debt from crippling you and your family’s needs, not to expose you to illegal pressure tactics. If you face harassment, know that you have the right to file a complaint.
Convinced that you need a legal way out and protection from undue pressure?
Know more about how to arrive at a tailor-made loan settlement and how to legally fight Bank Harassment. Contact Us for guidance on protecting your peace and your rights.
Would you like to know the definitive RBI guidelines on the conduct of loan recovery agents to help you spot and report Bank Harassment?
