What is the solution when you are unable to pay your credit card dues?

There may be a situation when you are no more in a position to clear your credit card dues and you are under constant pressure from the banks/recovery agents. Under such circumstance what are the options open for the customer?

You can approach the issuing bank for an out-of-court settlement. You have to explain to them your genuine difficulties and also your willingness to settle the dues. You can negotiate with the bank and mutually agree to settle the dues in instalments within certain time frame. Many banks would be willing to enter into an agreement to clear off the outstanding dues against payment of an agreed amount, in instalments.

Filing insolvency is another option. One can file insolvency petition under Provincial Insolvency Act 1920. As per the Act, the debtor has to furnish proof that can satisfy the court of his/her inability to repay the debts. The court can also issue directions for assessing the debtor’s assets and properties. This option is generally not availed in India to avoid negative publicity. However, this is a legally tenable option and this can protect you against harassment by creditors. To use this option you will need the assistance of an experienced lawyer. Even banks can file insolvency petition against a debtor.

Selling of properties to clear the dues is also an option but is a painful one and should be resorted to only as a last measure when all the other avenues have failed.

On a general note, defaulting the credit card payments will have its own repercussion. You will be added in the CIBIL’s list of defaulters and your credit rating would be adversely affected. This will also affect your chances of availing future loans from other institutions.

It is advisable to try and make the minimum payment (in most cases it is 5%) to maintain a good payment record. Meantime, you can take the help of your friends/relatives to pay off the dues

Disclaimer: The above is only a general opinion and not a legal advice. Please take the help of a legal expert to obtain a better and accurate opinion.