Taking a loan helps us circumvent our lack of large sums of liquid cash. And, we pay back the loan with interest, in EMIs.
Sometimes, because of circumstances beyond our control, we are unable to repay our debts in a timely manner.
The FD amount of Rs. 10 Lakhs and the house property given as collateral security may be availed to repay the loan which remains unpaid.
You can talk to the bankers and request for adjustment of the collateral security in the form of fixed deposit available with the bank and explain them the circumstances that the company is closed now, hence it may not be able to repay the loan.
The house proerty now as collateral may be auctioned to adjust the loan by the sale proceeds.
The property which was used as collateral for the loan can be repossessed and later auctioned by the lender after following due legal process.
All borrowers are provided the opportunity and have the right to approach the bank if there is any difficulty in repaying the installments and to choose an option to restructure their debt to enable a smooth repayment process.
further proceedings depend upon the customer’s approach to the issue and his current circumstances. The legal procedures will definitely not emerge out of the blue, it is a process resorted to if initial measures do not yield results.
If a borrower is unable to maintain the terms and conditions of his loan, he can request the lender to relax the same. This may lead to reduction of charges, lowering of interest rate, lengthening of the loan tenure, moratorium on interest, etc.
The borrower may be bankrupt or in no position to make further payments. He may get the option to settle the loan through a small payment. Recently, a bank offered a settlement offer to its NPAs in the education loan sector, in which up to 90% of the principal and 100% of the interest were waived off.
You may also put some efforts to negotiate with the bank based on your circumstances.