Credit Default - Final Settlement Steps, How to

In the past few days, we have been receiving various queries on credit card defaults and delayed payments which has taken the payment obligation of the borrower to few Lakh rupees. If you are in the same situation as these guys are, here is what you have to do.

Update on 23-12-2009
Many complained that the Banks were unwilling to lend an ear to your settlement offers. So the first step now should be to contact BCSBI who will counsel you on how to get out of this debt trap.

Talk to the bank who issued the card and negotiate hard. Tell them you would like to pay off in good faith and ask for concession, yes put all your negotiation skills to work here. Once you both settle on some amount these are the steps you MUST and Should follow. [It is better to negotiate with the bank itself rather than the Goons / Goonda / the collection agent because Bank Pays to the Collection Agent commission as high as 15% of the recovered amount and he will haress you until you pay it to the bank because he is waiting for his comission]

• Get a letter from the bank in which they mention "Final Settlement of Outstanding dues" with your complete name, address and credit card number on which you have defaulted
• Make your payment by CROSSED CHEQUE only
• As soon as the payment is done, close this credit card account by giving writing instructions saying w.r.t Final Settlement, I have cleared all the dues and want this account to be closed. [Keep a proof of closing this account, say banker stamps on the second copy of the lettr or send it by registered A.D]
• Preserve all this documentation for the next 5 years, atleast.
  
• Chances are the your name will be in the CIBIL defaulters list, give time of 6 months before you apply for another loan so that the bank clears your name off defaulters list.
  
• Work and Plan your finances well before you opt for any other form of credit - card, personal Loan, auto loan etc
• Next time when you apply for any kind of credit, if your name is still in the defaulters list, then you have every right to know on which account you have defaulted. If this is the same as the credit card account on which you have defaulted, then all those documents of Final Settlement, crossed Cheque payment will come in handy here. Attach attested photocopies and try to get your name cleared off the defaulters list. Don't submit the originals you have.
  
• Yes this is a painful process, but you have no choice.
  

What if Settlement Amount is as Large as Rs 500,000 [5 Lakh] ?
Hire a lawyer because the amount is large and in any case save all the documentation.

Should you have questions and comments, please feel free to ask.

Creditors Axe Limit for Satyamites

Credit Card lenders in India are taking measures to safeguard their capital in the hands of Satyam Employees extended by means of Credit Cards. We have confirmation that HDFC Bank, ICICI Bank, HSBC and Citibank have reviewed the accounts of all Satyam employees and have drastically cut their credit limits and in some cases more than that - decline the transaction.

Credit Limit of one of the Associates was reduced from Rs 200,000 to Rs 40,000. Another associate reported that his credit card transaction was declined at merchant terminal. Banks have also instructed their staff to monitor salary accounts of Satyam associates and process EMIs and other loans the employee may owe to the bank first before honoring other credits.

ICICI Bank Staff said,

It is true that the credit has been cut. Credit card is an unsecured loan. We are also answerable to our shareholders.

Citibank has already frozen all the accounts of Satyam Computers Services Ltd.