I Lost my job suring covid locksown. I have been taking personal loans from people and now it has totally amounted to nealy 60 lakhs.. they have given loan to me to get more interest... i am taking loans and paying interest to old lenders.. What should i do? There seams to bd only one option i dont know whether to take it up..

Ans: ? Understanding Your Current Situation

You lost your job during the Covid lockdown.
You took loans from people to survive.
Those loans have now added up to nearly Rs.60 lakhs.
You borrowed to pay interest to earlier lenders.
This is a classic debt trap.

First of all, thank you for sharing openly.
It is not easy to talk about debt.
But you have taken the first brave step.

This is a very serious situation.
But it is not hopeless.
You must take action now.

You may feel only one option is left.
But let us assess all sides.
Let’s explore your options carefully.

? Debt Trap: What It Really Means

A debt trap is when debt creates more debt.
You borrow to repay past dues.
This never-ending loop increases stress.

Interest keeps growing month after month.
Soon, even paying interest becomes hard.
This leads to mental, financial, and emotional stress.

It can feel like you’re drowning in loans.
But remember: this trap can be broken.

You must pause and not borrow again.
Stop the borrowing cycle immediately.

This may sound tough, but it is needed.

? Assessing the Type of Loans

These seem like informal loans.
Private lenders often charge very high interest.
This is sometimes unregulated and risky.

Unlike banks, these loans don’t follow RBI rules.
So they may use pressure or threats.

First step is to list each loan.
Write name of lender, amount, date, and interest.
Know exactly how much is owed and to whom.

This written clarity will help with planning.
You need a strategy now.

? Mental Clarity and Acceptance

Debt causes anxiety and panic.
But staying calm is very important now.

Understand that you are not alone.
Many people struggled post-Covid.

Your intention was never wrong.
You borrowed hoping to recover.

So don't feel guilty about the past.
Now it's time to fix the future.

Accept your current status with courage.
This mindset shift is very important.

? Don’t Rely on Borrowing Again

You may feel tempted to borrow again.
But that will only delay the problem.

New loans won’t solve old loans.
They will only increase total interest outflow.

Focus on solution, not on temporary relief.

Say a strict NO to new borrowing.

? Stop Paying Just Interest

If you keep paying only interest,
then principal never reduces at all.

Many private lenders prefer this situation.
They earn high returns forever.

So pause and think differently now.
You need to start reducing principal.
But before that, understand the full picture.

? Analyse All Your Income Options

You lost your job during Covid.
Can you start working again now?
Even a small earning can help.

Explore full-time or part-time jobs.
Use your skills for freelance work.

Can you teach online?
Can you drive or deliver?
Can you join a startup?

All income sources matter now.
Even Rs.5000 per month helps.

Don’t reject any work due to pride.
This is just a temporary phase.

Any income will increase your confidence.

? Lifestyle Audit and Expenses Check

Make a list of all your expenses.
Cut all non-essential spending immediately.

No eating out, no online shopping.
No premium OTT, no gadgets, no gold.

Use public transport wherever possible.

Reduce your mobile and internet bills.
Buy only essentials and basic food.

Start living very simply.

This sacrifice is temporary but necessary.

? Legal Way Out If Things Are Too Deep

If all lenders demand full repayment,
and you don’t have income,
then you can consider debt resolution legally.

There are legal options available in India.
You can approach an Insolvency Resolution Professional.
Under Indian law, individuals can declare insolvency.

It is not shameful.
It is a legal tool to rebuild.

But this should be a last option.
You must try negotiation first.

You may also consider a one-time settlement.
That means paying partial amount to close loan.

Many private lenders agree to this.
They recover part and write off rest.

But document everything with proof.

No verbal deals. Only written agreements.

? Try Personal Negotiation First

Talk to each lender personally.
Tell them your true situation.

Say you will repay in parts.
Show them a payment plan.

Say clearly that no new loans will be taken.
Assure them you want to repay.

Ask for interest reduction or waiver.

Most people appreciate honesty.
They may agree to small EMIs.

? Take Help from Certified Financial Planner

A Certified Financial Planner can guide you.
They have experience with debt cases.

They will not judge you.
They will plan repayment step by step.

They can help in budgeting and planning.

Avoid going to unregulated agents.
Only work with professionals with CFP credentials.

A planner can also help negotiate better.
They can help you track your goals again.

? Don’t Try to Recover Money by Investing Now

Many try to invest to cover loans.
That is a very dangerous idea.

No investment gives overnight returns.
Don’t fall for fake schemes or tips.

Avoid trading, crypto, lottery, or risky business.

Right now, your focus is reducing debt.

Don’t try to earn more from stock markets.
You may end up losing more money.

Investing can come later, not now.

? Mutual Funds Can Be Used Only Later

Once your debt is closed or manageable,
then you can begin investing slowly.

But never invest before clearing loans.

Avoid direct funds as they offer no guidance.

Direct funds may seem to save money.
But without expert help, mistakes happen.

Also, emotional decisions cause wrong fund choices.

Investing through regular funds via CFP-led MFD
gives guidance, support, and correction over time.

Regular funds are better for long-term goals.

They provide accountability, rebalancing, and behavioural coaching.

That is critical for someone recovering financially.

? Avoid Index Funds Right Now

Index funds may look low-cost.
But they are unmanaged and passive.

They mirror the market fully.
So, in downturns, they fall deeply.

They have no active protection or exit.
They don’t change based on market conditions.

Actively managed funds are safer for you.
They have fund managers taking decisions.

They give better support in volatile times.

? Don’t Depend on Friends for Help Again

Avoid taking loans from friends or relatives now.
That can spoil relationships and create pressure.

You may lose peace of mind.
Even if they offer help, say no.

This recovery has to be from within.

Relying on others again repeats old pattern.

? If You Hold Investment-Cum-Insurance Products

If you have any traditional policies or ULIPs,
then surrendering might help right now.

These plans give low return and high lock-in.

You can take the surrender value.
Use it to pay off urgent debt.

Later, switch to pure-term insurance
and invest in mutual funds via CFP-MFD route.

? Build Emergency Fund After Debt Is Cleared

Once your loans are over,
build a small emergency fund.

It should cover 3-6 months of needs.
Keep it in a liquid fund.

So, you don’t borrow again in crisis.

This small step avoids future debt trap.

? Emotional Strength and Family Support

You need inner strength right now.
Speak to family openly about everything.

Don’t hide anything from spouse or parents.
Ask for their mental support and patience.

Even emotional help makes a big difference.

Stay strong and stay grounded.

? Monitor and Track Every Month

Track your debt repayment monthly.
Write down each amount paid.

This creates hope and gives clarity.

Small progress gives mental peace.

Celebrate every loan closed, no matter how small.

Keep a simple spreadsheet or notebook.

? Finally

This situation looks hard right now.
But you have the power to overcome it.

Act fast and act clearly.

Don’t delay decisions due to fear.

No more borrowing.
No more interest payments blindly.

Focus on income, expenses, and planning.

Debt freedom is not far,
if you take steady action with support.

There is always a way forward.

Take the first step today.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment