What are the rights of a debtor in India?

A debtor, also known as the borrower, is a legal entity that owes money to individuals or financial institutions. The individuals or financial firms that lend money are called creditors. In the process of debt collection there is always a formal agreement between the creditor and debtor regarding the payment, period, discount deals, etc. Failure to uphold the terms can lead to fines and penalties. Moreover, if the debtor fails to pay or keep up with the terms of debt collection, creditors can bring them to court for judicial action. However, if a debt collection agency deploys unethical and dishonest methods during the process of debt recovery, debtors can sue creditors for unfair debt collection practices.

Let us look into a few such rules and regulations that will protect debtors from unethical debt collectors-

1. A debt collection agency cannot abuse, or harass or humiliate the debtor using obscene or profane language. Both debtor and creditor must be treated with respect and dignity. There should not be any use of violence or threats in debt collection practices.
2. Unless it is the suggestion of the debtor, a debt collector should only call the borrower between 7 AM to 7 PM.
3. A debt collection agency cannot misrepresent the overdue amount or claim false allegations against the debtor.
4. There should not be the usage of unfair debt collection practices against the debtor. For instance, debt collectors cannot collect undue payments or fees from debtors.
5. There should be respect for the privacy and personal space of a debtor. Physical distance must be maintained between the debt collector and borrower without invading their privacy in the process of debt recovery.
6. The terms and agreements of debt collection should only be discussed with the debtor or co-signatory. A debt collector cannot discuss the terms with anyone else besides the borrower.
7. A debt collection agency should only meet the debtor at the billing address. Unless an alternate address has been provided by the debtor, debt collectors cannot visit them at their workplace or any other venue.
8. All questions and doubts about the terms of debt collection must be answered by the debt collectors. If the debtor requests to speak to the supervisor, his request must be complied with by the debt collector.
9. If a debtor is lagging behind the payments, the creditor can call the debtor at a reasonable frequency to inform about the payment history and overdue amounts. However, calling multiple times or back to back calls are not encouraged and can be considered harassment. All calls regarding the debt collection must be recorded and logged by the creditor.
10. A debt collector must seek permission and look for the convenience of the borrower to converse about the overdue payments. Debt collectors cannot force their way into a conversation with debtors.

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