What punishment is given to a personal loan defaulter by court

989 votes

I suppose the bank had filed civil suit for recovery. It isn’t always better to contest the same but as you told that you have been proceeded ex parte the bank may get a decree against you and will file execution for recovery of decreetal amount. In that case your property can also be attached for payment of sum and in worst case you may have to face civil imprisonment if court finds that you are intentionally not making the payment. The advice to you is to get the exparte order set aside and contest the suit on merits and also try to negotiate with bank to settle the matter.

Advocate Kabir Dhall LawRato

678 votes

You need to understand that ex parte proceedings are initiated only in civil cases. Normally there is no imprisonment if you have movable or immovable properties to clear debt. But you need to file an application to call the ex parte order back and join the proceedings of case. You need to defend. If you defend properly, bank may agree on a good time for one time settlement. In such an event you can resolve dispute with minimum hassle. For further inquiry you can fix an appointment for telephonic/vedio/personal conference for further advise.

Advocate Arun Kumar LawRato

998 votes

if the case is being heard exparte, then you can file an application for setting aside expartee order and then defend the case and ask your lawyer to file application for compromise and see if some consensus can be arrived at.
once a case is decreed, then execution will be filed wherein your property can be attached and sold if there is no property in your name then a jail term of three months might be announced.

i strongly suggest you to approach a lawyer and get the expartee order set aside and get the same defended.

Advocate Pratik Duhan LawRato

101 votes

When a person defaults on a personal loan, the lender has legal recourse to recover the outstanding amount. Here's what may happen in such a situation:

1. Issuance of Legal Notices: The lender typically starts by sending legal notices to the borrower, demanding repayment of the loan amount. These notices may specify a deadline for payment.
2. Debt Recovery Tribunals (DRT): If the borrower fails to respond or repay the loan, the lender can file a case in the Debt Recovery Tribunal (DRT). DRT is a specialized court for handling cases related to debt recovery.
3. Secured vs. Unsecured Loans: If the loan is secured with collateral (e.g., gold, property), the lender may initiate the process of selling the collateral to recover the outstanding amount. For unsecured loans, the legal options may vary.
4. Asset Seizure: In some cases, the court may order the seizure of the borrower's assets to recover the loan amount.
5. Credit Score Impact: Defaulting on a loan negatively affects the borrower's credit score, making it difficult to secure credit in the future.
6. Garnishment of Wages: In some cases, the court may order the garnishment of the borrower's wages, where a portion of the borrower's income is directed to the lender to repay the loan.
7. Civil Lawsuits: The lender may file a civil lawsuit against the borrower to recover the outstanding debt.
8. Criminal Action: Generally, non-payment of personal loans is considered a civil matter, and criminal action is not common. However, if fraud or deliberate intent to not repay is involved, the lender may pursue criminal charges.

It's important to note that the specific actions taken by the lender and the legal consequences of loan default can vary based on the terms of the loan agreement, the lender's policies, and the borrower's financial circumstances.

Advocate Chikirsha Mohanty LawRato