Got a legal notice for loan default? Do not ignore it. Read the notice, note the deadline, keep your loan papers ready, and reply in time, with a lawyer of your choice if the notice is from a court or arbitrator. Below: the common notice types and what to do for each.
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Sources: Reserve Bank of India (rbi.org.in), RBI complaint portal (cms.rbi.org.in), India Code (indiacode.nic.in).
The lender may go ahead with arbitration or a court case, and you may lose the chance to give your side. Deadlines can pass. It is better to read it and respond in time.
Not paying a loan is generally a civil matter. A criminal case can arise in specific situations, such as a bounced cheque under Section 138 or cheating. Take any such notice seriously.
Section 138 of the Negotiable Instruments Act deals with bounced cheques. After a cheque bounces, the person who was to be paid can send you a demand notice, usually within 30 days of the bank's return memo. You then usually have 15 days from getting the notice to pay. Act quickly if you get one, and consider speaking to a lawyer.
A demand notice is a formal letter from the lender or its lawyer. It asks you to pay the overdue amount by a given date. It often comes before legal action. Read it carefully and note the last date.
You can still talk to the lender about a payment plan or settlement after a notice. The lender decides, and any court or arbitration deadline keeps running, so reply in time. Get any offer in writing before you pay.
It is usually wise to reply on time. A lawyer of your choice can help you decide what to write. Keep copies of everything you send and receive.
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