What are my options after job loss and loan denial?
I lost my job 6 months ago and currently have 4 personal loans from Groww, Cred, and Aditya Birla. • Groww: ₹12,000 (24 EMIs paid out of 36), ₹9,600 (9 EMIs paid out of 36) • Cred: ₹7,419 (24 EMIs paid out of 36) • Aditya Birla: ₹12,300 (24 EMIs paid out of 30) I have sent loan restructuring requests to these NBFCs, but they denied the requests, stating that there is no option for loan restructuring. What can I do?
If you can pay only some EMIs, prioritise. For example, keep at least one loan current to show lenders you’re making an effort. Banks often look more kindly at a borrower who pays some EMIs than one who stops everything abruptly. Never wait for demands. Inform lenders as soon as you foresee trouble. Seek deferment or a temporary moratorium informally. Lenders have discretion to extend tenure or accept interest-only payments for a few months. Showing initiative may earn you a short respite.
If a recovery agent violates norms, file an FIR with local police. Simultaneously, lodge a complaint with the RBI or police against that agent. RBI guidelines (for banks and NBFCs) forbid harassment. While waiting for formal relief, blocking aggressive contacts or instructing them to communicate only in writing is wise
Mitigation Strategies If a lump-sum payment is possible, negotiate a full and final settlement. NBFCs often agree to settle at 30–80% of the outstanding debt once it turns a certain age. This will still damage your credit, but it avoids litigation. Check if you can take a single loan to pay off all smaller loans. Consolidation can lower EMI and interest. A Lawyer can negotiate with creditors, file complaints, or prepare defences if a suit is filed. A lawyer can also draft a formal settlement/compromise agreement.
Persistent default has severe repercussions. Credit Score Decline: Every missed EMI is reported to credit bureaus. A single 30-day delay can knock 50–70 points off a CIBIL score. Multiple defaults compound the effect. A falling score means future loans – for a car, home, or credit card – will be harder or more expensive to get. If defaults exceed 90–180 days, lenders will mark accounts as non-performing or “written off.” Credit bureaus may show a “bad debt” flag. After 180 days, NBFCs typically write off the loan in their books and mark it in your credit report. This “written-off” status stays in reports for years and signals other banks/NBFCs to decline new applications or charge very high rates.
Potential consequences of default? India’s Insolvency and Bankruptcy Code (IBC) now includes individuals. Under IBC Part III, an insolvent individual can apply for a Fresh Start or an Insolvency Resolution. The rules are technical, but in principle: If your total debt is under the specified limit (initially ₹35,000), you can apply to wipe out debt and get a “fresh start.” This option is limited and meant for very low debts. If debts exceed the fresh-start threshold but remain within the cap, you can file for insolvency at the Debt Recovery Tribunal. A resolution professional is appointed to work out a repayment plan with creditors. If successfully approved, you will resume paying under the plan. If it fails, your assets are liquidated to pay debts.
If lenders insist on repayment or initiate recovery, NBFC must go through the DRT to recover dues. In practice, an NBFC can file a petition in the DRT if a borrower defaults. The DRT process involves a hearing, evidence of default, and issuance of a recovery certificate. As a borrower, you will get notice and can contest or settle the claim in DRT proceedings. If the debt is small, the lender may file a civil suit in court for repayment. You will receive a summons and must file your written statement. In either forum, you may raise defences or apply for a settlement. Each recovery action also permits an appeal or remedy.
If negotiations stall, use formal grievance mechanisms: NBFC Grievance Cell: First, lodge a written complaint through the NBFC’s published grievance portal or email. By RBI direction, NBFCs must resolve complaints within 30 days. RBI Ombudsman (CMS): If the NBFC has assets ≥ ₹100 crore or accepts deposits, it falls under the RBI’s Integrated Ombudsman Scheme. If your complaint is unresolved after one month, file a grievance online via RBI’s Complaint Management System (CMS) portal. The Ombudsman can order the NBFC to resolve disputes or compensate for delays.
Even if restructuring isn’t formally offered, propose a one-time settlement or revised partial-payment plan in writing. RBI expects lenders to consider genuine proposals under fair practices. Avoid simply skipping payments, as silence worsens your legal position. Send reminders if you receive no response. If the lender has an internal grievance cell, escalate the issue there.
You must first examine all debts. List each loan’s outstanding balance, tenure, EMIs paid and remaining, and review the loan agreements. These NBFCs operate under RBI regulation, so each loan contract is enforceable but maintaining clear records of loan documents and correspondence is essential before proceeding. Before resorting to formal remedies, approach each NBFC with a written request outlining your unemployment and repayment difficulties.
If NBFCs reject your restructure request, send them a written proposal for one-time settlement or partial payments. You can also approach the Debt Recovery Tribunal or seek relief under the Insolvency and Bankruptcy Code (IBC) for individuals. Avoid ignoring payments, as it may lead to legal notices or collection action. For further legal assistance contact us on our helpline number.
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