Arbitration notice
6 months ago
I have received an arbitration notice from HDFC Bank due to pending personal loan amount but I have no money to repay.
What should I do.
A.Dear Client,
Once the dues against a loan are not repaid by the Borrower for any reason whatsoever, it is treated by the Bank as NPA. Accordingly, the Bank sends notice of arbitration to the Borrower asking him/her for repayment of the entire dues lying against your loan offering suitable terms through arbitration and mediation. Usually, Lenders are not legally obliged to settle a debt lowering your outstanding debt, but because they want to protect their bottom line, they may agree to a debt settlement to avoid further financial loss. You can try to negotiate a debt settlement on your own, but sometimes it's typically done through third parties like debt relief companies, which you may hire to negotiate the settlement matter with the lender on your behalf. With this method, you will make payments to the debt settlement company rather than your creditors/lenders, along with any fees. Debt settlement is an agreement between a lender and a borrower in which the borrower repays a portion of a loan balance and the lender forgives the balance. You may consider starting the negotiation by offering to pay 25% or 30% of your outstanding balance in return for forgiveness on the rest. But, it may be noted that while there are legitimate debt relief/settlement companies, there are also many scam operations. So, if you're considering for settlement of dues, the Consumer Financial Protection Bureau(CFPB) suggests for contacting your state attorney general's(AG) office and local consumer protection agency to ask if they have any consumer complaints on file about that company. Some states require that debt settlement companies be licensed, which may provide some added protection. Although a debt settlement can offload some of your financial burden, there are also a few potential risks and downsides to consider. First, a debt settlement will affect your credit score. That will make it more difficult for you to get credit or good interest rates in the future. Another potential drawback is that when you settle debt, you could face tax consequences. Further, a quick counseling session with a certified credit counselor can help you to discover your options and choose the right path forward.
Once the dues against a loan are not repaid by the Borrower for any reason whatsoever, it is treated by the Bank as NPA. Accordingly, the Bank sends notice of arbitration to the Borrower asking him/her for repayment of the entire dues lying against your loan offering suitable terms through arbitration and mediation. Usually, Lenders are not legally obliged to settle a debt lowering your outstanding debt, but because they want to protect their bottom line, they may agree to a debt settlement to avoid further financial loss. You can try to negotiate a debt settlement on your own, but sometimes it's typically done through third parties like debt relief companies, which you may hire to negotiate the settlement matter with the lender on your behalf. With this method, you will make payments to the debt settlement company rather than your creditors/lenders, along with any fees. Debt settlement is an agreement between a lender and a borrower in which the borrower repays a portion of a loan balance and the lender forgives the balance. You may consider starting the negotiation by offering to pay 25% or 30% of your outstanding balance in return for forgiveness on the rest. But, it may be noted that while there are legitimate debt relief/settlement companies, there are also many scam operations. So, if you're considering for settlement of dues, the Consumer Financial Protection Bureau(CFPB) suggests for contacting your state attorney general's(AG) office and local consumer protection agency to ask if they have any consumer complaints on file about that company. Some states require that debt settlement companies be licensed, which may provide some added protection. Although a debt settlement can offload some of your financial burden, there are also a few potential risks and downsides to consider. First, a debt settlement will affect your credit score. That will make it more difficult for you to get credit or good interest rates in the future. Another potential drawback is that when you settle debt, you could face tax consequences. Further, a quick counseling session with a certified credit counselor can help you to discover your options and choose the right path forward.
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A.Dear Client,
Carefully review the arbitration notice to understand the details of the claim, including the outstanding loan amount, interest, and any other charges. Ensure that the notice is legitimate and from HDFC Bank. It may be possible to negotiate a settlement with HDFC Bank, even if you don't have the full amount to repay the loan. You can discuss options for a partial payment or a structured repayment plan with the bank. If you are in a dire financial situation and cannot repay the debt, you may explore the option of filing for personal bankruptcy under the Insolvency and Bankruptcy Code of India. It's important to be aware that ignoring the arbitration notice or failing to respond can result in an adverse judgment against you
Carefully review the arbitration notice to understand the details of the claim, including the outstanding loan amount, interest, and any other charges. Ensure that the notice is legitimate and from HDFC Bank. It may be possible to negotiate a settlement with HDFC Bank, even if you don't have the full amount to repay the loan. You can discuss options for a partial payment or a structured repayment plan with the bank. If you are in a dire financial situation and cannot repay the debt, you may explore the option of filing for personal bankruptcy under the Insolvency and Bankruptcy Code of India. It's important to be aware that ignoring the arbitration notice or failing to respond can result in an adverse judgment against you
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