Queries regarding CC settlement

[blugenie]

Dear CardBhai,

 I had few credit cards up until recently. The details are as follows:

Bank Name      Total OS     Settlement Amt
SBI                57,000         18,000
ICICI              38,000         20,000
HDFC              22,000         Card Active
HSBC              99,000         Card Blocked
==================================

As you can see, I have so far closed two cards. ICICI got in touch with me and initially gave me an offer for settlement in 25k but later on we settled for 20k; SBI gave me an exceptionally good offer (as you can see above) on humanitarian grounds (I'm physically challenged and had undergone a major surgery just days before they approached me.) Subsequently I also brought my HDFC card under limit and is now active.

The only thing (headache, really) remaining is HSBC. The collection agency has been calling me for a month and has given me an offer for settlement in 32k (this was in the last week of last month). I am NOT in a position to give them anything due to some serious medical problems. I initially promised the guy to try my best to give him at least 10k by 28th of last month but failed to keep my word. I've since then been ducking his calls. My plan is to wait until I have arranged some money which is sure to take another 2-3 months and then approach the Bank directly for the closure of my card. I seek your expert advice on this.

Also, I wish to know that what sort of report the other two banks, viz. SBI an ICICI are likely to have sent to CIBIL? ie "F&F Settlement or Written OFF"? If it is the later, is their any way I can get it rectified?

And lastly I would like to know what sort of legal action is possible in case of credit card default?

Regards,
Gaurav

 

[blugenie]

Cardbhai...Desparately awaiting your response...

[cardbhai]

Hi,

Apologies for the delayed reply.

1. Well, Sorry to tell, but the TRUTH is you have severely damaged your credit rating. The Settled A/Cs would be reported as "Written OFF" Refrence http://www.dalalstreet.biz/forum/cibil-credit-report-score/home-loan-declined-coz-of-cibil-masking/ However, you can get a Credit Report and see what is there, if it is simply reported as CLOSED, you are lucky.

2. You have to negotiate HARD with the other two BANKS. Ask them if you can convert them to Personal Loans / EMIs. Make sure you put a clause that they won't damage your credit rating. Under Law, you don't have any protection because RBI has given free hands to the bank to decide on the Most Important Terms and Conditions which the credit card company would have sent, when you opened the A/C.

Best,
CardBhai

[blugenie]

CardBHai,

 Thank you very much for your reply. Yes, I am aware that my credit rating has already been seriously affected. I already have one PL with HSBC and I am seriously thinking about asking them to add my CC outstanding amount to it.

 What I would like to know is:

1) Is CIBIL rating taken into account for car loans, home loans and education loans as well? I guess the rating is valid for seven years, is it possible that I can start from zero after that? (NOT CC,  a home loan)
2) What sort of legal action can be initiated by the banks in case of CC default? (not that I do not intend to repay; but in case HSBC does not agree to converting my dues to PL, I will have no choice but to avoid them for some time until I have arranged money). Please guide me what can I do if it really comes down to that.
3) And lastly, how should I deal with the collection agency? I am a little wary of them because of my physical condition.

Regards,
Gaurav

[cardbhai]

1. Yes you are correct.
2. They can file a Criminal Case for default and punishment only after the hearing. If you are interested in getting it converted to PL, why don't you get in touch with http://credit.cardbhai.com/2009/12/how-to-settle-credit-loan-defaults.html
3. Well I would never entertain any third party here unless it is a law enforcing agency. I have borrowed from the bank and why would I talk to a collection agency. Collection agents are not doing any charity. They are GOONS and from the amount you pay them, they will have their cut and pass the remaining to the bank. So that reduces the amount you have paid to the bank and increases. So directly deal with the BANK.

Best,
CardBhai.

[cardbhai]

1) Is CIBIL rating taken into account for car loans, home loans and education loans as well? I guess the rating is valid for seven years, is it possible that I can start from zero after that? (NOT CC,  a home loan)

Clarifying my response to Point 1 - The Credit Information Bill says Records should be on file for a Minimum of 7 years. It doesn't mention the Maximum. So I am not sure if it will be erased after 7 years. The Bill gives discretion to the Credit Information Company.