Rights of the Creditor

Creditors are often viewed as individuals having immense power and authority. Their rights might seem unjust to some considering how much control and influence they already have on the borrowers and in society. But as Indian citizens, we are all bound by certain laws, irrespective of our differences in power and social positions.

Creditors or lenders are those who lend out their money to someone else on certain terms and conditions. This lending, or loan, is sometimes secured and sometimes unsecured. There is risk involved in both cases. But the risk is slightly higher with unsecured loans. In the case of secured loans, the creditor can keep the security or mortgage against which the loan was provided, but in the case of unsecured loans, the situation is a little different.

Unsecured loans are provided purely on the basis of your credit report. The interest charged may vary from creditor to creditor, but usually there are high interest charges involved. So, what can a creditor do if you are unable to repay your unsecured loan?

Well, if you are a borrower and have missed the repayment of three EMIs consecutively, you will fall into the category of being a non-performing asset. Following this, you have approximately 60 days to approach your creditor to settle your debt, or else they can seek restitution from the court. The court will consider various aspects before coming to any judgment. If the creditor’s side is strong, remedies and options may be suggested to recover its dues from the borrower. Here the borrower's financial capacity is taken into consideration. Though the same may not be applicable in all cases.

But please remember that if you have certain rights as borrowers, so do the lenders.

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