• Confused between OTS and repayment through installment

Hello,
I have defaulted the car loan in a nationalized bank and the loan is almost 10 year old. As my financial position improved now, I approached the bank and the bank offered me OTS ( 2.5 lac against 2 lac over due), how ever if I need to pay the full amount including interest it is coming to around 5 lacs. With 5 lacs it seems I can pay it through EMI.
I am not sure of the impact of both option into my CIBIL score. Recently I checked the score and it is at 650 ( which is not good ), please suggest, how should I settle my loan due and also to improve my CIBIL score.
Asked 4 months ago in Civil Law from Bengaluru, Karnataka
It will be better to settle the matter as OTS and update the same before CIBIL after ful and final, get an NOC from the Bank too.

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Nadeem Qureshi
Advocate, New Delhi
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It is better you enter into OTS of Rs 2.5 lakhs with the bank in full and final settlement of your outstanding dues 

2) don't pay Rs 5 lakhs when bank is willing to settle for Rs 2. 50 lakhs 

3) bank should intimate CIBIL that account has been settled and no further money are due and payable 
Ajay Sethi
Advocate, Mumbai
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Since the repayment is done through the settlement reached between you and the bank mutually , you can always approach the bank for EMI option which they are likely to agree.
However I must mention that the 10 years old was time barred meaning thereby that the Bank could not have been recovered it legally.
However since you have acknowledged it in writing now the bank can recover it through legal means.
So better negotiate and settle.
Devajyoti Barman
Advocate, Kolkata
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54 Consultations
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Request bank to intimate CIBIL that account has been settled and no money is due and payable by you 

2) bank report would  decide your CIBIL score 
Ajay Sethi
Advocate, Mumbai
23328 Answers
1220 Consultations
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1. You will save money if you make payment through OTS proposal but it will spoil your CIBIL score since you will be rated as a defaulter who paid through OTS,

2. Your CIBIL scrore has already gone down because your being a defaulter,

3. Your CIBIL score will certainly improve if you pay off the entire dues with interest.
Krishna Kishore Ganguly
Advocate, Kolkata
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1. CIBIL Score will not improve after your writing them letters which will be of no use,

2. CIBIL Scores are recorded automatically since CIBIL captures date from the accounts of the Bank from its server for which CIBIL has been given the required password,

3. Your CIBIL score will improve when your financial record kept with the Bank in the form of accounts statement of your said loan improves.
Krishna Kishore Ganguly
Advocate, Kolkata
12131 Answers
233 Consultations
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If the bank has agreed for OTS agaisnt the outstanding loan and has assured to clear the cibil report in this regard why do you have to think about the other issues.
Did the bank tell you that the outstanding amount Rs. 5 lacs have to be paid despite agreeing for OTS? Instead of paying Rs. 5 lacs, you are paying just half of it.
Actually in the default cases EMIs will not be allowed for settlement. 
You may talk to bank and get it restructured if they agree or go for one time settlement as suggested. 
T Kalaiselvan
Advocate, Vellore
14138 Answers
127 Consultations
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I have not got into any written agreement with the bank as of now. I am the one who approached the bank on the option availability. With the above reply it seems like I can approach the CIBIL to update my score and all the problems are temporary. It seems like in the bank books it has been written off. I hope my action will have some good effect into my CIBIL score improvement.
I am not sure I am doing right thing approaching the bank on my own.

Please bear it in my mind that though the bank might have written it off as bad debt, until the outstanding loan is not cleared they will not pass the report to CIBIL about this hence the cibil will not automatically give credit to improve your score.
Only after the bank discharges the loan that it shall give clearance report to cibil and until then the adverse report with cibil will remain in the same status. 
T Kalaiselvan
Advocate, Vellore
14138 Answers
127 Consultations
5.0 on 5.0

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