Credit Card default & Personal Loan default

[mehraabhish]

Hi,

I live in a Tier 1 city and I currently owe 2 banks a personal loan of 5 lacs each. I have lost my job and have spent all my savings in paying off the Personal loan and credit card EMIs in last 3 months. I'm in midst of selling my owned house (residing) and I am planning to pre closing the loans with the capital gains and would be using the balance amount to buy another house in a Tier 2 city (moving to another city).

I'm anticipating that my house will be sold in next 2-3 months, however I would not be in position to service the EMIs of my 2 personal loans and dues of my 3 credit cards till the house deal is completed.

My questions are
1. Does the bank have any authority to stop the sale of my house or Can bank takeover my house for not paying 2-3 EMIs of personal loans? (Note: House not mortgaged with the bank. Only standard agreement signed during application process of personal loan). Does that standard personal loan has a pointer in which the debtor's property can be used to service the loan?
2. Do banks give 2-3 months time to individuals to get their finances in order?
3. To whom specifically in the bank should I inform about this situation. Would informing a phone banker, collection agent suffice?
 
PS: I have never defaulted to any loan EMI or credit card payment in the last 8 years of my earning life. This is the first time my finances got derailed and I have all the intentions to meet my payment obligations, including the late payment and interest.
 
Thank You,

Regards,
Abhishek

[chetan]

1. If you do not have any Loans on the House that you are Selling, then nobody will know about this Sale Transaction except the Income Tax department if the Value exceeds Rs 50 Lakhs.

2. Deposit the Money You Get in a Different Bank where you don't have Loans / Credit Cards.

3. Deposit the Money in a Separate Capital Gains Account & from that account use it to BUY the Home in Tier-2 City.

4. Meanwhile, Borrow from your Relatives / Best Friend to pay the Minimum Amount Due on the Credit Card & Personal Loan so that even your Credit History will not be damaged.

Hope this Helps.

[mehraabhish]

Hello Mr Chetan,

Thank you for the guidance.  I do not have any loans particularly on the house. I had this doubt only because the bankers ask the question "Is your house owned?" at that time of application of personal loan.

Also, it would be really great if you can guide me on 2 more questions.

1. Will it help to inform the bank that I am in process of selling my property, for them to give me little more time, while charging the requisite late fees and interests on the delay (till I pay them back with the capital gains).

2. And, if they know about the sale of the property (because of Question no 1), can they prove to be any hindrance to the deal?

Thank you,

Regards,
Abhi

[cardbhai]

1. Telling them you are in your own house at the time of application does not mean they have a right on the said property, unless you have signed some other documents which makes the property as co-lateral or surety.

2. If the Banks want they can attach your property by going to Court in such a way that the proceeds of the sale will goto court and Bank will take its Share due to them first and then give the remaining amount to you. Banks usually don't knock at the Court doors for small amount.

Why bring the Bank in loop ? Borrow from Friend / Relative to make minimum payments until the property is disposed off and then pay the remaining amount due on Cards / Personal Loans.

[mehraabhish]

Further to this... I have picked up a job and would be starting from 14th Oct onwards..

I have missed out on all the payments this month, since there was also a medical emergency at home (grandmother hospitalised). My salary would start from this month onwards. However the bank collection agents are calling me every alternate day to check on the payment status.

My question is

1. Will they allow me to not pay the amount this month and the next, so that I can pay half the outstanding by end of November 2014 (Full salary credit)