Pandemic has increased uncertainty in our lives, especially on the financial front. Pay cuts and job losses are the issues many of us have faced after COVID-19. It has been more difficult for people who have been on the paycheque-to-paycheque cycle. Job loss and pay cuts have put tremendous financial stress on people. These problems have led to an increase in the number of delinquent accounts, mental stress and creditors’ harassment.
Too many terms at once?
So, let’s begin with the basics. When does an account become delinquent?
An account becomes delinquent when the account holder does not pay towards it even after the due date. When one stops making payments toward the loan account, the creditors start charging interest on the outstanding amount. Once a person becomes delinquent, the creditor tries to push the borrower to make payment within their legal rights.
But where does the problem start? When does the creditors’ harassment begin?
Your creditor has the legal right to ask you for money they have lent, and you are legally bound to repay your creditor, but every creditor must comply with RBI’s guidelines. When the borrower misses out on repayment, the account becomes delinquent, and that is when the creditor starts calling the borrower multiple times a day, and this is where the problem begins. The calls are often harassing in nature which can lead to stress and anxiety. In a nutshell, the problem starts when the collection calls turn into harassment.
How can a creditor harass an individual?
Harassment from the creditors is not limited to calls. Many times, the recovery agents go beyond their limits to recover the debt amount from the borrower. But the question is, what are the limits?
As per guidelines by RBI, a creditor-
- Must not call the borrower more than three times a day
- Must not visit the residence or workplace of the borrower without permission
- Should have an authorization letter from the bank to visit the residence of the borrower
- Do not have the right to share the information about the financial obligations of the borrower with anyone (No third-party disclosure)
- Must not contact friends and family of the borrower to ask for the repayment
- Must talk to the borrower politely
- Should give the borrower ample notice before moving the account into default
Read more on RBI’s guidelines.
Let us see how to deal with creditors’ harassment and pressure:
Know your rights
Many recovery agents cross the limits when it comes to debt recovery. It is necessary for the borrower to know their rights and understand what they can and cannot do. Knowing their rights would help them prevent any misconduct by the recovery agent. In case of misconduct, you can approach the bank to file a complaint against the recovery agent. If the bank doesn’t reply or help you with the complaint, you can also write to RBI to resolve your issues.
Communicate with your creditor(s)
The problem begins when the borrower stops communicating with the creditor. It is crucial to interact and put the point across. So, the borrower must stay in touch with your creditor. The borrower must pick at least one call from each creditor every day. One should keep the creditor informed about their situation and ask for time.
Explain your hardship
Life is uncertain, financial problems can arrive at any time, and we have seen its proof with the ongoing pandemic. The problem with financial hardship is that there is no timeline for it. If an individual cannot repay the debts due to financial hardship, one must talk to their creditor and explain the situation.
Keep the records
Yes, dealing with creditors and recovery agents is troublesome, but one needs to be clever, especially while dealing with harassing creditors. Record your phone calls, messages, emails, or any communication from the creditors or recovery agents. Keeping a record of the correspondence with the creditor or recovery agent can be helpful if the recovery agent starts harassment or become abusive.
Approach the bank in case of acute harassment
As mentioned before, the recovery agents often cross the line while asking for payment. In case of acute harassment, one can write to the bank about the misconduct or ill-treatment. One must share the proof of abuse. If the bank doesn’t resolve the complaint, one can also approach RBI for further action.
It is difficult to handle multiple harassing creditors. FREED’s Creditors’ Harassment Protection Program can help you to deal with harassing creditors. If you are struggling to repay your debts, you can visit our website for more information or reach us at 0124-66663666 to talk to our debt counselor.