I have a loan debt if 1.90 lacs. I have lost my job. Bank has filed a case for recovery. I do not have money for settlement also as I have borrowed money already. What should i do please guide.

Ans: Dear Anonymous,
It's time to buckle up NOW!
Stop all wasteful expenditure first...
Clear pending bills by selling immovable properties/other investments if any.
Also, if it is possible to invite a trusted friend/relative who can help you plan on how to get you out of this, that will be a good thing to do...
Ending your life is only giving up...hold on, seek help and people are willing to step in. Be graceful to whoever is willing to help you to plan on easing this mess and promise to make it up to them when things get better for you...AND keep this promise...
The future can be bright BUT only if you take the right steps now to ensure that...
Push on and keep at it...it's a phase that you are going through; it will ease!

All the best!

Ans: First, thank you for sharing this openly. It takes courage to talk about financial distress. You’re not alone — many good earners fall into debt traps because of high-interest credit cards and instant app-based loans. You can come out of this with structure and patience. I’ll guide you step by step.

» Understand your situation clearly

You owe around Rs. 3 lakh and earn about Rs. 50,000 per month. That means your debt is roughly six times your monthly income — manageable with proper planning, but it needs strict discipline. The main issue is not the amount, but the interest rate and harassment from unregulated lenders.

» Avoid informal “loan settlement panels” or unverified lawyer groups

It is risky to enroll in private settlement panels or so-called “lawyer panels” unless you’ve verified their legitimacy through a trusted source. Many such agencies:

Charge high upfront fees.

Promise settlement but fail to negotiate effectively.

May worsen your credit score or even lead to legal complications.

Instead, always deal directly with your bank/NBFC. If the app-based loan is from a registered NBFC, you can file a complaint with the RBI Ombudsman if harassment continues.

» Take these first actions immediately

1. Stop taking new loans.
Do not take any new app loan to pay another. This only deepens the trap.

2. Create a clear list of your debts.
Write down:

Lender name

Total due

Interest rate

EMI amount

Remaining tenure

Once it’s all on paper, clarity replaces panic.

3. Prioritise debts.
Pay highest-interest debts (credit cards or app loans) first. Keep making minimum payments on others to protect your credit score.

4. Negotiate directly with lenders.
Call your credit card customer care and ask for a one-time settlement or EMI conversion plan.

Most banks will convert dues into a lower-interest monthly plan if you explain hardship honestly.

Never ignore calls. Always request written communication.

Keep records of all calls and emails.

5. Deal with app-based recovery harassment properly.
If recovery agents threaten or harass:

Record the call.

Report it to the National Cyber Crime Portal or RBI Sachet portal.

Many instant loan apps are unregulated or even illegal — you can refuse unlawful demands and lodge a complaint.

» Build a repayment structure

Your take-home pay is Rs. 50,000. Let’s keep your plan practical.

• Basic expenses: Around Rs. 25,000–28,000 per month for living needs.
• Debt repayment: Start with Rs. 15,000–18,000 monthly.
• Emergency & family contribution: Rs. 3,000–5,000 for safety.

With Rs. 15,000–18,000 monthly repayment, you can close Rs. 3 lakh debt within 18–20 months if you secure reduced-interest restructuring.

You can:

Combine smaller loans into one personal loan at lower interest (from your salary bank) to simplify repayment.

Avoid co-signing or using family credit.

Once repaid, never borrow from credit cards or loan apps again — rebuild only with emergency funds.

» Manage your credit cards

If your debt is mainly on credit cards:

Request EMI conversion or balance transfer to a lower-interest card or bank loan.

Stop using the card until the balance is zero.

Ask the bank for temporary interest waiver if financial hardship is documented.

» Psychological and job safety

Debt stress affects sleep, health and job focus. Recovery agents try to shame people into paying faster — ignore emotional blackmail.

Block harassing numbers after noting details.

Tell them to contact you only through official email.

Never let them involve your office or parents. That’s illegal under RBI’s Fair Practices Code.

If harassment becomes severe, file a police complaint under IPC Section 506 (criminal intimidation) or approach a local Legal Services Authority (free legal aid) for guidance.

» Steps to rebuild after clearing debt

Once loans are closed, take written closure letters and update CIBIL.

Keep one credit card with very low limit and pay full amount monthly to rebuild score.

Start a small emergency fund — Rs. 1,000–2,000 monthly until you have at least 3 months of expenses.

Then slowly begin investing in safe mutual funds or recurring deposits — never in credit-like products.

» Finally

You don’t need any paid settlement service. You can recover on your own with patience and structured repayment.
Avoid app loans, avoid quick-fix “lawyer settlements”, and use official channels only.
You have income, youth, and awareness — that’s your biggest advantage. In one to two years, you can be fully debt-free and emotionally free too.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in

https://www.youtube.com/@HolisticInvestment