From 5 Loans to 55: Our Founder on Why India’s Borrowers Are Buried in Debt
For many Indians, falling into debt doesn’t begin with reckless spending, it begins with a genuine need. A personal loan to cover a medical emergency, a credit card for monthly expenses, or an instant loan to bridge a temporary cash shortage can seem manageable on its own. The challenge arises when one loan leads to another, repayments start overlapping, and monthly EMIs become difficult to keep up with.
According to Harish Parmar, Founder of Settle My Loan, the average borrower who once managed around five loans now often carries 15 to 20 active loans, with the highest case reaching 55 loans. This shift reflects how easily borrowers can become trapped in a cycle of debt without realising the long-term consequences.
Understanding how this cycle begins is the first step towards avoiding it and knowing when to seek help can make all the difference.
Also Read: Personal Loans, Credit Cards, BNPL – Which Debt Should You Settle First?
Key Takeaways
- Easy access to credit has made borrowing faster, but managing multiple loans has become increasingly difficult.
- A debt trap usually develops gradually as borrowers take new loans to repay existing ones.
- Recognising warning signs early gives borrowers more options before financial stress becomes overwhelming.
- Loan settlement is generally considered only when genuine financial hardship makes regular repayments impossible.
Why Are More Indians Falling Into a Debt Trap?
Borrowing money has become easier than ever. Personal loans, credit cards, BNPL services, and instant loan apps offer quick access to credit, making it easy to borrow whenever funds are needed.
According to the Reserve Bank of India (RBI), outstanding personal loans crossed ₹58 lakh crore, while credit card dues reached nearly ₹2.9 lakh crore in early 2025, highlighting India’s growing reliance on unsecured credit.
The problem isn’t borrowing, it’s borrowing beyond your repayment capacity. Many borrowers start with one loan for a genuine need but gradually take additional loans or use credit cards to repay existing EMIs. What seems manageable at first can quickly turn into a cycle of debt that’s difficult to escape.
“Many borrowers don’t fall into debt because they’re financially irresponsible. They fall into debt because unexpected events force them to borrow repeatedly. Understanding your options early often creates more opportunities to resolve debt before it becomes overwhelming.”
Harish Parmar, Founder, Settle My Loan
Source: Mint Interview with Harish Parmar
How Do Borrowers End Up Managing 15–20 Loans?
A decade ago, most borrowers managed a home loan and perhaps a personal loan. Today, many simultaneously hold personal loans, credit cards, Buy Now Pay Later (BNPL) accounts, instant loan app borrowings, consumer durable loans, and vehicle loans.
Since each lender assesses credit independently, borrowers can accumulate multiple loans in a short period. As EMIs fall on different dates, keeping track of repayments becomes difficult, often leading to rising financial stress, shrinking savings, and a growing debt trap.
- Personal loans
- Credit cards
- Buy Now Pay Later (BNPL) accounts
- Consumer durable loans
Signs You’re Entering a Debt Trap
Financial stress rarely appears overnight. Most borrowers experience warning signs long before repayments become unmanageable. Recognising these signs early can help you take corrective action before the situation worsens.
Some of the most common indicators include:
| Warning Sign | What It Could Mean |
| Taking a new loan to repay an existing EMI | Your debt may be growing faster than your repayment capacity. |
| Paying only the minimum amount on credit cards | Interest charges continue to accumulate, increasing your outstanding balance. |
| Managing multiple personal loans | Multiple EMIs can strain your monthly budget and cash flow. |
| Missing EMI due dates | Can lead to late payment charges, additional interest, and a lower CIBIL score. |
| Receiving frequent recovery calls | Your account may be overdue. Speak with your lender early and understand your available options. |
What Is Loan Settlement and When Should You Consider It?
Loan settlement is a financial resolution option generally considered when a borrower is facing genuine financial hardship and can no longer repay the outstanding loan despite sincere efforts.
Situations such as job loss, a medical emergency, business losses, or a significant drop in income may make regular EMIs difficult to manage. In such cases, borrowers can approach their lender for a One-Time Settlement (OTS), where the lender may agree to accept a reduced amount as full and final payment.
However, loan settlement isn’t suitable for everyone. If you can continue making regular repayments, options like loan restructuring may be more appropriate. Understanding your financial situation is the first step towards choosing the right solution.
How Does the Loan Settlement Process Work?
Although every lender follows its own policies, the loan settlement process generally includes these steps:
- Assess your financial situation
- Discuss your hardship with the lender
- Negotiate the settlement amount
- Obtain a written Settlement Letter
- Complete the payment
If you’re unsure how to approach the process, a professional loan settlement company can help evaluate your situation, negotiate with lenders, and guide you through the required documentation.
Real Story, Real Impact: From 13 Loans to Financial Stability
Business losses pushed Gaurav Ashok Thete, a construction contractor from Mumbai, into a cycle of borrowing. What began as a way to manage expenses eventually left him with 13 active loan accounts, an outstanding debt of ₹6.22 lakh, and 200+ recovery calls every day. After approaching Settle My Loan, the team negotiated with multiple lenders, managed creditor communication, and guided him through a structured settlement process. Over 16 months, his outstanding liability was reduced to ₹2.22 lakh, helping him save ₹4 lakh (64%) and regain financial stability.
Read the full case study: Escaping the Trap of 13 Loans & 200+ Daily Calls: How Gaurav Thete Reclaimed His Life
How Can Settle My Loan Help?
Managing multiple loans can be overwhelming, especially when repayments and recovery calls begin affecting your daily life.
At Settle My Loan, we help borrowers facing genuine financial hardship understand their options and work towards a practical resolution. Our support includes:
- Reviewing your outstanding loans and repayment obligations.
- Providing legal support to manage notices, arbitrations and more.
- Well documented settlement and negotiation process with multiple creditors.
- Paralegal team answering recovery calls on your behalf and providing creditor harassment relief
Every financial situation is unique, so our approach is tailored to help you achieve a structured and legally compliant resolution.
Can Loan Settlement Affect Your CIBIL Score?
Yes.
When a loan is settled instead of being repaid in full, it is generally reported as “Settled” rather than “Closed” on your credit report, which may affect your CIBIL score and future loan applications.
However, repeatedly missing EMIs can result in additional interest, penalties, recovery proceedings, and further damage to your credit profile. Once your finances improve, responsible borrowing and timely repayments can gradually rebuild your credit history.
Conclusion
Managing multiple loans can quickly become overwhelming, especially when repayments begin affecting your financial stability and peace of mind. The sooner you recognise the warning signs, the more options you’ll have to regain control of your finances.
Whether it’s reviewing your repayment strategy, discussing options with your lender, or exploring loan settlement in cases of genuine financial hardship, taking timely action can prevent a temporary financial setback from becoming a long-term debt problem.
At Settle My Loan, we help borrowers understand their options, negotiate with lenders where appropriate, and navigate the settlement process with legal and paralegal support so they can move towards a structured financial resolution and mental peace.
FAQ
Do Like and Share
