Default refers to the inability to pay off the debt or the interest of debt when due. This happens when a borrower fails to fulfill the legal obligation of repayment of a debt. Not only in the case of inability but also in the case of unwillingness to honor the debt, the debtor may default. A defaulter is a person who fails to repay the amount due.
The reason for a default may be certain circumstances that are beyond the control of a debtor, such as a job loss, disability, economic conditions, family emergency and so on. In the world of banking, loan defaulting is a serious offense. A number of times the problems related to repayment of the debt are temporary and can be managed by giving some extra time to the defaulter. If you default due to a sudden unfortunate change in your financial conditions, you should immediately inform the bank. The respective bank will discuss the issue with you and help you with the possible options available.
In case a defaulter is being harassed by the recovery agents, he or she can file a complaint regarding the same, to the bank. The RBI has set certain rules in order to protect the borrower in any such case. This implies that the bank has the right to recover its money from the borrower, only by proper means.
Recommended Read : Recovery Agents Engaged by Banks (RBI Circular)
