What to do if one can't pay the home loan emi

Have his home is the biggest dream of the common man. Buying a property now days in not a child play. But financial institutes always ready to finance for a home. They take it as granted and the safest bet.

So taking home loan is not hard. But what if one is unable to pay the EMIs of that home loan. There may be some cases where people unable to pay the EMIs like some emergency or losing the jib etc.

Bank does not forfeit the property immediately like bouncing 2-3 EMIs but if that continue for six months, banks will take the property.

 What should one do if fall in the same situation where no option to pay the EMIs on time for a big period. There are some points which one must remember even taking a small loan because one needs to pay loan with interest always. These are some points which one must remember if falls in same situation. 

What is the rule?
Banks or financial institute does not want to attach one’s property and this is the last option left with them. They always want to negotiate. Banks need to enforce Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (SARFAESI) to recover non-performing assets (NPA).

Banks generally reminds the borrowers about the last payment or misses the EMI. They mail or phone you about this. After the three month default of non paying the EMI, bank will send a demand notice to the borrower asking him to pay the dues as soon as possible.
If the borrower doesn’t entertain the mail or phone by the bank and also doesn’t pay the dues, bank will send a legal notice through legal department. After the legal notice send to the borrower, bank will wait for the next three months before declaring it as Non performing assets(NPA).

After declaring the assets as Non performing assets, bank can start the process of recovering the property through the SARFAESI act. Even after acting this act, bank will give the borrower 2 months time notice to clear the dues.

It means it will take around 5 months from the first default when the bank send a notice to the borrower that it has valued the property from the valuer and the auction will take place on particular date. The auction date is also a month late from the notice date.

So the matter is simple. Banks are more keen to recover money from the borrower than from legal procedure and from auction because it is a very timely process and may take time as well as loss. Banks need to wait at least 6 months to start recovery proceedings to take the property as attached.

The borrower will get the notice from the debt recovery tribunal which is treated as the last stage for the borrower to save his assets from the auction.

What should the borrower do?

Attend the hearing set by the tribunal. This is the must do step for the borrower. In this case, one can get an agreement with the bank. Banks are more serious about track record, and if one has good record and one tells about his serious problem for not paying the debt, bank will offer some leeway to pay the dues.

Ask the bank to restructure the loan and taking consideration about the future source of income.

In case of default in the loan due to increase in the rate of interest, ask the bank to increase the tenure and keep the EMI at the same level.

Keep a record of all the loan and loan payment. This makes a good track record and all the credit revolves on the track record.

Problem matters most. If bank is satisfied with the problem and satisfied with the will of the borrower to pay the dues, bank may offer more time to pay the dues. But this offer matters with case to case.

Banks always try to get their money in the practical way. They even hear you in the case of auction date declared and return it to you if problem is genuine and borrower will pay the dues.
Keywords-home loan,house rent emi,home loan emi payment
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About Nitin Aggarwal

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