How many times have you received calls or visits demanding payments for your credit cards or loans? How many times have these calls left you disturbed and sometimes even scared by the behaviour of the agents? The answers to these questions are probably the same for the people who for some unfortunate reason or the other might have not been able to make their payments on time.
So, how do you handle them? How do you ensure that each time that they visit you, you are not left with a headache? Firstly, let's understand what these agencies are.
A collection agency is a business that pursues payments on debts owed by individuals or businesses. Most collection agencies operate as agents of creditors and collect debts for a fee or percentage of the total amount owed.
The term collection agency is usually applied to third-party agencies, called such because they were not a party to the original contract. The creditor assigns accounts directly to such an agency on a contingency-fee basis, which usually initially costs nothing to the creditor or merchant, except for the cost of communications.
The agency will then take a percentage of the debt that is successfully collected upon successful collection.
However, more than once the rude behaviour of collection agents has been news in the media. Reports of consumers being driven to suicides and medical problems (like heart attacks) being caused due to the threatening and menacing behaviour of the recovery agents on behalf of the primary banks have grown in recent times.
Many of these agencies are quite large, with a countrywide network of offices. However this business is unregulated with a result that most such outfits have very low standards and almost no staff screening procedures.
So what do you do? Let's take a look at the steps you can take in order to avoid those humiliating situations in front of your family and friends.
If you are genuinely in default then try and engage in a dialogue with the bank. If you can make some payment or provide some additional security the bank might be willing to reschedule the payments for a short period of time.
Know your rights. The Indian Banking Association (IBA) has laid down the following guidelines for recovery proceedings:
- The customer should be contacted ordinarily at the place of his/ her choice or at his/ her residence or even at the place of business/occupation between 7 am and 7 pm.
- Bank representatives should avoid inappropriate occasions such as bereavement in the family while making calls/visits to collect dues.
- The bank should ensure that all written and verbal communication with its borrowers is in simple business language and should adopt civil manners for interaction with borrowers.
- Written communications, telephonic reminders or visits by the banks' representatives (including recovery agents) to the borrowers place or residence can be used as loan follow up measures.
- The bank will then give a written notice about any legal or other recovery measures including repossession of the security.
- The bank should be willing to consider handing over the property to the borrower any time after repossession and before concluding sale transaction of the property, provided the bank dues are cleared in full.
If the recovery agents do not stick to the above procedure, or if you receive abusive/threatening calls, record the call, making sure that the caller gives details like the bank s/he represents. You can also take down the name of the collection agent and the collection agency and bank they represent and approach the banking ombudsman.
Don't be scared. The collection agents cannot threaten (verbally or physically) any individual to cough up payments. In case such a situation arises, you are entitled to lodge a police complaint naming the collection agent, the collection agency and the bank the agency represents.
Most people, who default, may have genuine problems and would try to make payments. However, they turn a blind eye to the tactics used by the collection agents because of either their ignorance or their unwillingness to get into a legal battle with the bank. But, you can ensure that by knowing you rights you do not get bullied around.