Recently, I took a loan from Axis Bank to consolidate some existing debt. This included pre-closing loans from both Ashleel Bank and Hdfc Bank through a balance transfer. Axis Bank deducted the outstanding balance of the Ashleel Bank loan, processing charges, and general insurance from the loan amount. They provided me with a demand draft (DD) to submit to Hadfaqsi Bank for pre-closure of the existing loan there. The remaining amount from the loan was to be used for personal expenses. Today, when I went to Hadfaqsi Bank to pre-close the loan with the DD, they informed me of additional charges. These included prepayment penalties, interest accrued up to the date, and GST. I ended up paying these extra charges to close the loan. Afterwards, I contacted Axis Bank to inquire why they hadn't informed me about these additional pre-closure charges from Hdfc Bank upfront. Their response was that it's standard practice for banks to charge these fees when pre-closing a loan. While I understand that there might be pre-closure charges, I believe Axis Bank should have included the full amount needed to close the Hdfc Bank loan in the initial DD. This would have allowed me to better plan my finances and avoid the unexpected additional burden. Their lack of transparency about the total cost of pre-closing the Hdfc Bank loan caused me financial stress and disrupted my financial planning. I have paid the extra charges with DD to Hdfc bank and they started the Pre closure of the loan. But they told, the emi will be deducted and will reflect back after the pre clousure process ends. The pre closure of Hdfc Bank loan requires 7 to 10 working days as they told. Also i have to pay new EMI of Axis Bank loan one day before. My mind is blowned up by all this stressful and dissatisfied situations. Note - The loan process by Axis bank was also distressfully long about 2.5 weeks because of unprofessionalism and miscommunication between thier employee's, they made the loan documents two times due to their mistakes. Please help with your genuine guidance. Open to any advices or suggestions. Thank you

Ans: • The bank's claim of INR 11,00,000 as the foreclosure amount is likely correct, even though you've been making consistent payments. In the initial years, home loans involve significant interest charges. Your monthly payments (EMI) primarily cover the accruing interest initially, with a smaller portion going towards the principal.

• Check your loan agreement or contact the bank for details on any prepayment penalties. Negotiate to waive or reduce the penalty, especially if you have a good repayment history.

• For the alternative option, you can connect with your existing bank for the loan refinancing or loan restructuring. It would help you to revise your existing loan, such as interest rates, payment schedules and other terms. You can also connect with other banks or NBFCs for the same. They will provide you the better option compare with your existing bank.

Before moving forward with any choice, we advise you to carefully consider your options and assess your financial status.

Ans: You have shown great courage. At 26, many wouldn’t face the issue head-on. You are taking ownership. That’s the first step towards rebuilding your financial life. Let’s go step by step and address everything from a 360-degree view.

» Your Current Loan Situation

– You had a total debt of Rs. 15 lakh from banks, NBFCs, and credit cards.

– You already settled the credit card dues. That’s one relief.

– You have two personal loans: one from a bank and one from an NBFC.

– First personal loan: 4-month overdue. You are paying regularly now.

– Second personal loan: 13-month overdue. You continue monthly payments.

– NBFC loan of Rs. 1.6 lakh: Paid only 2 EMIs. No payment for 20 months.

This is a classic case of over-leveraging. But you are trying to get back. That matters.

» Are Threat Calls Genuine or Fraud?

– Calls claiming to be from police stations are often fake.

– Police don't call people and threaten arrest over loan dues.

– FIR is not filed for civil loan default unless there is fraud or cheque bounce.

– No police officer will arrange a call with a "lawyer" in a conference.

– Going to the police station was a wise step. Real police confirmed no case.

– This confirms the call was fake. It was done to scare and force payment.

– This is a collection tactic used by recovery agents, not by genuine police.

Do not panic. Stay calm. Don’t let such calls disturb your mental peace.

» About the One-Time Settlement (OTS) Offer

– NBFC says: Pay Rs. 70,000 as OTS for Rs. 2.2 lakh dues.

– OTS is a legal option. But only do it after written confirmation.

– Ask for official email or letter on NBFC letterhead with:

Total outstanding

OTS amount

Payment deadline

NOC after payment

– If they refuse to provide written letter, it is not genuine.

– Don’t pay even a single rupee without proper proof.

– Always do NEFT or UPI to NBFC’s registered account. Never to personal numbers.

Getting the settlement in writing will protect you from future harassment.

» Will Banks or NBFCs Allow Restructuring?

– RBI had announced a loan restructuring scheme during COVID.

– That window is now closed for most banks and NBFCs.

– However, lenders still offer internal restructuring options.

– It depends on your repayment history and intent.

– Since you are paying both personal loans regularly, you may qualify.

– Approach the bank branch directly. Speak to the loan officer.

– Explain your situation honestly and request restructuring.

– They may reduce EMI, extend tenure or give temporary moratorium.

NBFCs are stricter but still consider restructuring in some cases.

» What Happens if You Don’t Settle the NBFC Loan?

– NBFC can keep reporting default to credit bureaus (CIBIL, Experian, etc.).

– This affects your credit score and future loan eligibility.

– But they cannot arrest you for non-payment.

– Only legal cases can happen if there is cheque bounce or fraud.

– Civil loan default is not a criminal offense.

– However, harassment and mental pressure from collection agents may continue.

You can file police complaint if agents harass or abuse you.

» How to Verify If a Legal Case Is Filed Against You

– Ask the NBFC to provide copy of the case filed. Check case number.

– You can visit https://ecourts.gov.in/
and search with your name.

– If nothing shows, no case is filed. Just a bluff.

– If something shows, consult a lawyer for advice.

– Never rely on WhatsApp messages or phone calls from unknown numbers.

Always insist on official communication through email or post.

» What If You Want to Pay the OTS?

– If Rs. 70,000 settlement is manageable, it can give you mental peace.

– But pay only if:

You get written letter

The NBFC account number is verified

They commit to giving you NOC after payment

– Once paid, get NOC and CIBIL report showing “Settled” status.

– Note: A “settled” status is better than “default” but still affects credit.

Even better is to pay full dues over time, if you can manage.

» Impact of Settlements and Overdues on CIBIL Score

– Settled loans reduce score significantly. So does prolonged overdue.

– Your bank loans (4-month and 13-month overdue) are also damaging score.

– Consistent EMI payment for 6-12 months will help improve score slowly.

– You may take a secured credit card later (against FD) to rebuild history.

Your credit health can be rebuilt with discipline and time.

» How to Handle Such Loans and Get Out of Debt

– Prioritise loans with legal risk and highest interest.

– Try to regularise the 4-month and 13-month overdue loans.

– Negotiate for restructuring with the bank.

– For NBFC loan, push for OTS in writing or pay slowly if possible.

– Avoid taking fresh loans to repay old ones. That’s a trap.

– Don’t fall for quick-fix loans from apps or unregulated lenders.

Stability is more important than speed right now.

» How to Avoid Such Situations in Future

– Never borrow beyond 30-35% of monthly take-home income.

– Avoid credit card rollovers. Interest is too high.

– Always track EMI dates and keep auto-debit enabled.

– Maintain emergency fund equal to 6 months of expenses.

– Build credit score slowly. Aim for 750+ over time.

Small steps now will secure your future financial health.

» Need to Check Your CIBIL and Take Action

– Get your CIBIL report from www.cibil.com
or OneScore app.

– Review each loan account. Check status – active, closed, settled, written-off.

– If errors are there, raise dispute through the portal.

– Regularise overdue accounts. It will improve your future loan chances.

CIBIL repair is a long-term game, not an overnight thing.

» Handling Debt Recovery Agents Professionally

– Never argue or fight. Keep records of all calls.

– If they threaten or abuse, send written complaint to lender’s grievance cell.

– Also file complaint to RBI Ombudsman at: https://cms.rbi.org.in

– If harassment continues, visit local police station with evidence.

You have rights. Use them firmly but respectfully.

» How to Structure Your Repayment Plan Now

– List down all loans, EMI, dues, and overdue months.

– Rank them by urgency: Legal risk, interest rate, amount overdue.

– Pay minimum EMI on all, and extra on top loan.

– Avoid spending on non-essentials. Stick to strict budget.

– If possible, do a side income to close loans faster.

A written repayment roadmap keeps your focus strong and steady.

» Final Insights

– You are in a tough phase, but this is not the end.

– Take each day at a time. Don’t fall for fake threats.

– Get OTS only with written letter. Don’t pay blindly.

– Start improving credit score step by step.

– Avoid fresh borrowing. Prioritise repayments.

– Restructuring is possible. Talk to banks officially, not over phone.

– Protect yourself legally if harassment happens.

Your comeback is possible. Stay calm and take responsible actions.

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

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