Nowadays, taking a personal loan from a mobile app or bank has become a matter of minutes. The money comes to your bank account immediately. But the real tension starts when due to some reason you lose your job, your business sinks or some other major compulsion arises. In such a situation the EMI starts bouncing. When the situation worsens, the biggest fear in the mind of a common man is that will the police come to the house if the money is not paid? Do I have to go to jail? The simple and clear answer is – no. Mere failure to repay the loan is not a legal crime. If your intentions were clear, but due to bad circumstances you are not able to pay the EMI, then you cannot be sent to jail just for this.
What does the bank do if the EMI is broken?
If you do not pay EMI regularly, the bank does not take any strict action immediately. First of all you are reminded to deposit the money through calls and messages. After this legal notices are sent. If the money is not deposited even after a long time, the bank considers your loan account as ‘NPA’ (non-performing asset). Its worst effect is on your CIBIL score. A bad CIBIL simply means that in future you will face a lot of difficulty in getting a new loan or credit card from anywhere. After this, the bank can adopt the legal route and start the process of recovering its money through the court. If you have pledged something as a guarantee, then action can be taken against that also.
In what cases is there a risk of going to jail?
As we said, not being able to pay EMI due to compulsion is not a crime. The need to go to jail arises only in cases of fraud. Suppose someone has taken a loan using fake documents, has lied to the bank about his job or earnings, or has deliberately run away with the money. In such cases, the bank can directly go to the police and lodge an FIR, after which a criminal case is formed. That is, intentionally committing fraud with the bank and not being able to pay the money due to compulsion, both are completely different things.
How to avoid recovery agent threats?
Those who do not repay the loan fear the recovery agent the most. But, here the rules of the Reserve Bank (RBI) give full power to the common man. Recovery agents may call you or even come to your home or office to ask for money. But under no circumstances do they have the right to misbehave, abuse or threaten. They can’t even bother you by calling at midnight or at other times. If any agent crosses his limits or tries to insult you, you can feel free to lodge a complaint with the police or RBI. The law is completely with you in this matter.
What path should one take if there is a financial problem?
Often people stop picking up the bank’s phone out of fear. This is the biggest mistake. Doing this increases the problem instead of reducing it. If you feel that paying EMI is not in your power now, then go directly to the bank. Tell your real problem openly to the bank officials. Banks help you in many cases. If needed, they can reduce your EMI, extend the loan repayment time or give a moratorium for a few months. Many times, the option of One-Time Settlement is also available, due to which the legal hassle ends forever and your mental stress is also relieved.
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