How to protect yourself from debt harassment

Debt consolidation is a common financial solution in India, but it can be a risky proposition if not done correctly. Harish Parmar, the founder of SingleDebt, a debt management company that helps people get out of debt, in an interview with Bizz Buzz, discusses the legal options available to defaulters who are being pressured by recovery agents, and how people can protect their legal rights from collection agencies and harassment. He also spoke about the enormous illegal lending apps that have become a serious problem in India, and how we can best raise awareness about the risks of these apps

How does debt consolidation operate in India, in your opinion?

The process of debt consolidation involves obtaining a new loan to pay off existing debts. In India, where a significant portion of the population lacks financial literacy, people often opt for debt consolidation as a way to repay their debts. However, this approach can backfire and lead to more debt. On the other hand, debt consolidation can be an effective way to consolidate multiple high-interest debts into a single loan, which can save money and reduce overall debt burden. Unfortunately, many people in India are not aware of this solution and need to be educated about debt management.

Fortunately, SingleDebt is a debt management company in India that offers affordable solutions to repay debts without negatively impacting financial stability. In addition to assisting clients with debt repayment, they also provide financial literacy education to help people better manage their debts.

What legal options are available to defaulters who are being pressured by recovery agents?

In situations where recovery agents are pressuring defaulters, it is important to understand the available legal options. Unfortunately, there have been instances where recovery agents have engaged in unethical behaviour and harassment towards borrowers, which has resulted in extreme consequences such as suicide. As a result, it is crucial to take action against such behaviour.

At SingleDebt, we not only provide debt management solutions, but also have a team of paralegals and advocates who can file lawsuits against recovery agents to protect our clients' rights and reputation. However, it is important to be aware of the dos and don'ts when dealing with recovery agents and utilizing legal remedies.

The Reserve Bank of India (RBI) has issued guidelines against the illegal harassment of borrowers by recovery agents, and it is recommended that everyone familiarizes themselves with these guidelines. Additionally, formal complaints can be lodged with the police in cases of harassment by recovery agents or other parties. Banks have also been notified of any misconduct committed by recovery agents.

If necessary, we can defend our clients in court actions, including defamation lawsuits brought against recovery agents. It is essential to take the appropriate legal steps to protect oneself from any unlawful behaviour by recovery agents.

How can defaulters protect their legal rights from collection agencies and harassment?

Instances of collection agents harassing borrowers have been reported, with some even resulting in extreme consequences such as suicides. In India, there are approximately 10,000 companies involved in debt recovery from individuals. These companies often employ third-party technologies to obtain borrower information, and untrained agents may resort to illegal tactics to intimidate people.

Defaulters can take several steps to protect their legal rights from collection agencies and harassment. It is essential to be aware of your legal rights as a borrower. The Fair Debt Collection Practices Act (FDCPA) lays down rules that govern the behaviour of collection agencies. Knowing these rules can help you understand when a collection agency has crossed the line.

All ways ask for proof of our debt from the collection agencies, they must provide evidence of the debt they are trying to collect. As a borrower, you have the right to ask for proof of the debt, including the original loan agreement and any relevant documentation. Keep a record of all communication with the collection agency, including phone calls, emails, and letters. This documentation can be useful if you need to file a complaint against the agency.

If you are still experiencing harassment, then you can contact Singledebt who have advocates that will help you protect your rights and will also negotiate a payment plan that you can afford to pay. Overall, it is important to remember that as a borrower, you have legal rights that protect you from harassment and unfair treatment by collection agencies.

How can we best raise awareness of the enormous illegal lending apps, in your opinion?

Illegal lending apps have become a serious problem in India, affecting not only farmers but also urban residents. Unfortunately, many people have taken their own lives due to the harassment they faced from collection agencies that employed violent and illegal methods. These apps target vulnerable individuals, offering them modest loans at exorbitant interest rates, without disclosing the true costs. As a result, the debtors face severe mental and financial distress, and often resort to extreme measures to repay the loans. Advocates for SingleDebt have been working tirelessly to support victims, reporting unlawful lenders to the RBI Ombudsman and filing police and cybercrime charges. Through counselling and aftercare, they help victims recover from the trauma of harassment.

To spread awareness about the risks of these illegal apps, the government needs to launch an awareness campaign. In the meantime, advocates like SingleDebt are doing their part by actively promoting their support to victims of illegitimate app companies. They are providing aftercare to help victims recover from the harassment and instructing them on how to protect themselves. The most effective way to raise awareness about the issue is through a concerted effort by the government, NGOs, and the media to educate the public about the risks of using illegal lending apps. By working together, we can protect vulnerable individuals from falling prey to these unscrupulous lenders and prevent further harm to our communities.

How may debt traps and loan defaults be avoided, in your opinion?

Many of our clients seek our assistance only after they have already defaulted on their debts, fallen into debt traps, and are under pressure from creditors and collection agencies. To prevent getting trapped in debt, we advise clients to stick to a budget, which involves reducing spending on non-essentials and setting aside extra money each month. Another option for paying off previous liabilities is through a debt consolidation loan. If you own a property, a low-interest secured loan is a good option to pay off current debt because the EMI may be considerably cheaper and hence simpler to manage.

In addition to these practical measures, we believe that financial education is crucial to preventing debt traps and loan defaults. Our organization offers training materials to anyone interested in learning about finances, budgeting, and credit management. We regularly publish blogs with tips and guidance on how to stretch your dollars further and avoid debt. By equipping individuals with the knowledge and tools they need to manage their finances effectively, we can prevent debt from becoming a burden and ensure financial stability for everyone.

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What is your opinion of the loan situation? Do you believe that excessive or needless lending is the root of debt?

In my opinion, there is a significant amount of irresponsible lending taking place in India. This issue can be compounded by the fact that some lenders do not conduct proper background checks on potential borrowers, making it easy for individuals to obtain loans beyond their financial means. This often leads to defaults and leaves borrowers struggling to repay their debts, while also damaging the relationship between borrower and lender.

Furthermore, lenders' aggressive collection tactics can make the situation worse for borrowers, who may find it difficult to make the required monthly payments. Therefore, it is crucial for lenders to exercise caution when evaluating a borrower's ability to repay the loan. By doing so, they can avoid putting borrowers in an unmanageable financial situation, ultimately reducing the risk of default and the burden of debt.