Case Study 8: Time Barred Settlement

This debt was Time barred and we were able to get the best settlement terms, which was a term settlement with credit clearance, improving his credit score. He had a debt of ₹1,13,333 and we were able to settle for ₹68,000 over four months

A 40-year-old married man from New Delhi had a loan that he had forgotten about and had not received any communications from the creditor, HDFC Bank, about the outstanding personal loan. When he applied for a home loan this entry showed up on his credit file and was hindering him from proceeding with the home loan he was applying for.

He approached us to help with a settlement and shared a copy of his credit file. After examining the credit file we discovered that the debt was over six years old. The last payment was made 5 years ago with the entry “Written Off” against the loan. 

Our Advocates were able to obtain paperwork from HDFC Bank about this loan and discovered that they had not been any legal action taken by HDFC Bank in relationship to this debt and had simply written it off. Our Advocates had advised that the loan was now “Time Barred”, meaning that the bank cannot take any legal action against the debt.

With this knowledge we were able to negotiate a term settlement with a “No Objection Certificate” (NOC) and we were successful in obtaining a 40% discount, a four month payment term with credit clearance and an improvement on his credit score.

The total outstanding was ₹1,13,333 and we were able to negotiate a term settlement with credit clearance for ₹68,000 with a total saving of ₹45,333.

Our Advocates checked the authenticity of the bank’s settlement letter to ensure that the creditor removed the “Written Off” entry on his credit file and replaced it with NOC or “Closed” 

A No Objection Certificate (NOC letter) is a legal document that certifies you have paid all your EMIs and settled any outstanding loans in your name. Sometimes referred to as a No Dues Certificate.

Few realize that for a new future loan like a home loan, their credit score will be consulted. If the closure of a past loan has not been updated on their credit file (due to failure of your past lender to submit the information to the credit bureau) it will lead to a sub-par credit score. Then, only an NOC comes to one’s rescue as it is the very document that can establish that the past loan was indeed repaid.

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