Loan Default: What will happen if you do not fill the EMI of home loan? Know when the bank can confiscate your property

News India Live, Digital Desk: People often take home loans to fulfill the dream of the house, but sometimes financial conditions become such that it becomes difficult to repay the monthly installment (EMI) of the loan. In such a situation, the biggest fear in the mind is that the bank does not seize our property. It is very important to know when the bank and under which circumstances can take your mortgaged property under its possession.

When does the bank take action?

If you are unable to pay three consecutive monthly installments of your home loan, the bank can start the process of seizing your property. The process is performed under the ‘Sarfaesi Act, 2002’ (securities and reorganization of financial assets and enforcement of securities interest Act, 2002).

Understand the entire process of seizure:

1. First notice (60 days): As soon as you fail to repay three EMIs continuously, the bank sends you a ‘demand notice’. In this notice, you are given time to repay the arrears within 60 days.

2. Second notice (30 days): If you do not make any payment in a period of 60 days or do not contact the bank, the bank sends you another notice. It is said in this notice that the bank is about to auction the property and you are given 30 more days.

3. Property auction: If you do not pay the outstanding amount even during this 30 -day period, then the bank gets the right to auction your property. The bank collects its dues from the amount received from the auction.

   • After recovery of arrears: If the amount received from the auction is more than the bank’s dues, the remaining amount is returned to you.

   • On getting less than dues: If the amount received from the auction is less than the bank’s dues, then you are still responsible to the bank for the remaining amount and the bank can recover that amount from you.

     
     

Do you have any legal option?

Within 45 days of receiving the first 60 -day notice by the bank, you can appeal to the ‘Debt Recovery Tribunal’, High Court or Supreme Court.

What to do to avoid confiscation of property?

• Talk to the bank: If you are having trouble repaying EMI, contact your bank immediately. The bank may offer the option of temporal discounts or loan restructuring.

• Partial payment: If possible, try to make some partial payments. This will make the bank feel that you are not running away from your responsibility.

• Sell ​​the property yourself: If the situation is very bad, try to sell your property yourself before the auction by the bank. This can give you a better price and the damage in the bank auction can be avoided.

• Take a loan wisely: Always take a loan according to your financial capacity, so that such a situation is not faced in future.

Remember, the bank’s purpose is not to seize the property, but to recover its money. Therefore, honestly tell your position to the bank and try to find a solution.

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