Are you being harassed by debt collectors? Know your legal rights.

Dealing with financial trouble is stressful enough. But when a debtor is hounding you using unethical methods, it can make matters even worse. The fact is, you have some rights when it comes to dealing with debt collection agencies.

RBI’s DRAFT GUIDELINES ON RECOVERY AGENTS BY BANKS

(Ref.DBOD.No.Leg.6723/09.07.005/2007-08 dated November 30, 2007)

Recovery Agents engaged by banks – Draft guidelines

There has been rise in the number of litigation against banks & adverse publicity in the recent past for engaging recovery agents. The consequent likely implications for reputation risk not only for the bank concerned but also for the banking sector as a whole has necessitated a review of the policy, practice & procedure involved in engagement of recovery agents by banks in India.

In this backdrop, the Reserve Bank proposes to issue the following operational guidelines for adoption by all commercial banks. A reference to “agent” in this guidelines would include agencies include by the bank. Their agents/employees, as well as the Banks’ own employees. Engagement of recovery agents.

THE FOLLOWING SPECIFIC ASPECTS BANKS ARE ADVISED TO TAKE INTO ACCOUNT WHILE ENGAGING RECOVERY AGENTS:

• Banks should have due diligence process in place for engagement of recovery agents. It will be structured to cover, among others, individuals involved in the recovery process.
• To ensure due notice and appropriate authorization by the banks, they should inform the borrower the details of the recovery agents engaged for the purpose, while forwarding the default cases to recovery agents. The details should include their telephone numbers etc. The recovery agents should call the borrowers only from telephone numbers notified to the borrower.
• Banks are advised to ensure that the contracts with the recovery agents do not induce adoption of uncivilized, unlawful and questionable behaviour or recovery process.
• The following terms are being advised to Banks in the matter of recovery of loans:

(a) The lenders should not resort to undue harassment viz. persistently bothering the borrowers at odd hours, use of muscle power for recovery of loans, etc.
(b) The banks should ensure that agents engaged by them for debt collection refrain from action/s that could damage the integrity and reputation of the bank.
(c) Their agents should not resort to intimidation or harassment of any kind, either verbal or physical, against any person in their, debt collection efforts, including acts intended to humiliate publicly or intrude into the privacy of the borrowers’/ credit card holders‘ family members, referees, and friends making threatening and anonymous calls or making false and ‘misleading representations.

Reserve Bank has requested the Indian Banks’ Association to formulate, in consultation with Indian Institute of Banking and Finance (IIBF), a certificate course for Direct Sales Agents / Direct Marketing Agents / Recovery Agents with minimum 100 hours of training. The above course is introduced by IIBF, banks should ensure that over a period of one year all their Recovery Agr – its undergo the above training and obtain the certificate from the above institute.

How to deal with credit card and loan disputes?

Disputes related to credit card and loans should always be resolved on E-mails. With changing time, people are avoiding this option and instead try to resolve the disputes over the phone which can cause numerous problems in the future. Having every communication in writing is time-consuming but a written conversation can become a great rescuer in the future.

What is the first step a bank takes when you apply for a home loan? It runs a check on your credit history. The loan is approved only if the applicant’s credit rating is good. One may not have taken a big loan or, for that matter, any loan in the past. But, a credit card dispute, however small, could hit a person’s credit rating.

Dealing with Loan Disputes

If you have taken a loan from a bank and miss paying to EMI’s then this period is known as a broken period. During this period banks penalize the customers and this amount is mandatory. However, the customer should take detailed information on these charges beforehand. If the bank denies disclosing this information then the customer can file the complaint in banking ombudsman or at RBI’s ombudsman website which requires customers to enter detailed information.

Other than this, if you close your loan before its maturity then the additional charges are levied on the customers. And banks have to mandatorily pre-notify this to the customers. Banks cannot levy unwanted charges.

Dealing with Credit Card Disputes

Many time customers have to deal with many problems while buying or returning insurance policy when they’re paying the premiums via credit card, read more about credit

Debt Settlement or Debt Consolidation. What’s the difference?

Debt settlement is negotiating with creditors to settle a debt for less than what is owed. This method is most often used to settle a substantial debt with a single creditor, but can be used to deal with multiple creditors.

Debt consolidation is an effort to combine debts from several creditors, then take out a single loan to pay them all, hopefully at a reduced interest rate and lower monthly payment. This is typically done by consumers trying to keep up with bills for multiple credit cards and other unsecured debts.

The pros and cons of debt settlement and debt consolidation vary, especially with regard to the amount of time it will take to eliminate debts and the impact it will have on your credit score. Both aim to make your debt more manageable. When used properly, either can help you get out of debt sooner and save money.