[Ays7]

As far as I know, the guarantor is liable to pay even if all means of collecting the debt from borrower are not exhausted. So if recovery agent think a guarantor is an easy target they will certainly try to pressurise him. What you can do is tell the recovery agents to take a hike and ask them to pursue this matter legally. Hire a lawyer and ask him to handle it, they usually will have tools to ensure that recovery agents do not personally visit the premises. Ofcourse it might mean being dragged in a recovery suit, but atleast that is private and better than having the hassle to deal with recovery agents.

Finally, if this matter does go the legal way, your defence should be that the recovery agents and dad’s partner are in cahoots and hence recovery agents have not taken any steps to secure and repossess the vehicle despite it being available and hence this is a conspiracy to defraud the guarantor. It is a weak defence but it will atleast force the recovery agents to go after the vehicle first.

[rahulk86]

Hey.

Firstly, when vehicle loans are issued, the vehicle is kept as the asset based on which the loan is given. Hence, when a loan becomes NPA, it is the asset which has to be proceeded against. After possession and sale of asset, if there are amounts still pending, then Financier may proceed against Borrower/Guarantor for balance amounts.

Here, the asset remain intact and free subject to Rs. 60,000/- . So suggest you insist on re-possession of the asset and then ask to provide a statement of accounts to show exactly the balance amounts due. The financier mostly doesn't want to go through the hassle of seizing the asset, sale, etc.

For harassment, file a complaint at the local police station. Use the receipt from this to file a civil suit for injunction against harassment. Mostly, recovery agents are outsourced by Financiers to 3rd parties to recover money.

[Kiran Joshi]

Originally Posted by Turbanator

I will have a different take, no doubt OPs dad was a guarantor, but if the asset value is higher than recovery, then they should not bother his dad.

Correct.

Don't fall to pressure of recovery agent.

Tell clearly not to trouble us and confiscate the car and sell it off.

If still they keep troubling, tell him that you will take legal action for harassment.

No recovery agent can harass even in case of default

Stay strong

[rsjagtap]

The forum has already provided ways to resolve this.

Just to add, document every visit that the recovery agent makes. Record conversations, videos, have witnesses see the agents come and go.

Since they are still professional in their behaviour it means you are only one of the options they have for recovery and not the only one.

You will witness becoming the only one once they their behaviour changes towards negative. Such is the recovery process of NBFC loan providers.

[DriverR]

This reminds me of the time I signed as a guaranter to a personal loan taken by an office colleague. He told me it was just a formality sake so I signed on as a) I was aware he was earning very well, and b) the loan amount was not very high.

All was fine for a year or two. Then he got transferred to another city (same company). After a month or so, I got a call from the bank asking for his contact as his last emi failed. They said if they cannot reach him, I would need to pay as the guaranter. I was shaken by this. I immediately used the office network to find the colleague's current phone number (office and personal) and gave it to the bank guys. Yeah, I may have sold him out but this was one headache I did not want. In anycase, I got one more bank call for the same purpose after a few days, and then no more calls. I also dropped a mail to the colleague informing that I had received a bank call and had passed on his contact number and he should sort matters. Looks like he sorted things with the bank since I was not disturbed after that. It was also the last time I stood as guaranter for anyone in office!

[thanixravindran]

Originally Posted by V.Narayan

As I said earlier it has been over 35 years since I went door to door collecting instalments but the law is quite clear that an unconditional guarantor is liable to pay as soon as any one instalment is in default. I would suspect all these car loan cases the guarantor is an unconditional one. A conditional Guarantor, sometimes found in a more corporate loan environment of SMEs, can be a case where the bank can approach the guarantor after exhausting certain well spelt out remedies.

Notwithstanding anything on guarantor part, in those Pre 2000 times, the biggest impediment to lenders was that they cannot repossess the secured asset/mortgage without a civil suit. We all know how long the civil suit takes. People milked this system. This was changed with SARFEASI act in 2000s which gave teeth to the lender to repossess the asset and auction it to recover without any civil suit. The home loan/MoD documents we sign will have this section. Only exception to this is agricultural land which is the only holy cow still remains

[anti21]

People have already given you pretty good advice.

To add to that, even if someone defaults on bank loans, they have a set of rights. Record every call and visit so that you have proofs. Do this without failure.

1. Ask the recovery agents for their ID. It should clearly mention that they are either agents from Mahindra Finance or have authorization from Mahindra Finance to initiate recovery.
2. You have right to privacy so the recovery agent cannot threaten you about telling your relatives or neighbors. If they do, file a complaint with Mahindra Finance.
3. The recovery agent can only contact you between 8AM and 7PM (except under circumstances like if you work in night shift). There also they cannot keep calling/sending message to you non-stop unless they have valid proof that you are trying to deceive them.
4. The following rules needs to be followed by lenders/recover agents
(a) the lenders should not resort to undue harassment viz. persistently bothering the borrowers at odd hours, use of muscle power for recovery of loans, etc.
(b) the banks should ensure that agents engaged by them for debt collection refrain from action/s that could damage the integrity and reputation of the bank
(c) their agents should not resort to intimidation or harassment of any kind, either verbal or physical, against any person in their debt collection efforts, including acts intended to humiliate publicly or intrude into the privacy of the borrowers'/ credit card holders' family members, referees and friends, making threatening and anonymous calls or making false and misleading representations.

RBI Circular for above

Still if the agents are harassing you, you can file a complaint with bank/NBFC. You can also file an FIR against recovery agent for harassment. If the cops refuse to take complaint or bank/NBFC does nothing, you can file a case with banking ombudsman or RBI. RBI can take strict action like imposing ban on bank/NBFC to use recovery agent for some time in that particular area.

So I think you can file a complaint with the banking ombudsman that instead of recovering the asset or contacting the borrower who has not fled, Mahindra Finance is harassing you. Maybe try to file the complaint with the NBFC first.

PS: Above is not legal advice and I would recommend you to consult a lawyer or debt management specialist who can guide you what to do in such case legally.

[vinu_h]

I'm a guarantor for a loan at Kotak and their FAQ is pretty clear. Going by this, the guarantor comes into the picture as soon as the borrower defaults.

Who is a guarantor?

A guarantor is a co-signer for a home loan who guarantees the repayment of the loan in case of default by the primary borrower. A guarantor can only be an individual.

When is a borrower labelled as a defaulter?

The term ‘default’ is the failure to pay back the interest or principal on a loan or security when due. Default occurs when a debtor fails to comply with the legal obligation of debt repayment. In the case of a Home Loan, it is the inability to pay the EMI or the principal amount

Right & wrong aside, Mahindra has been pulled up by the courts for their recovery tactics.

[Amey Kulkarni]

Originally Posted by 5haS_0209

I know it's my dad's fault to sign as a guarantor. Is there any other way to try to talk the recovery agent to stop coming to our house?

Don't waste your time with your dad's partner. He's not going to do anything.

My take :

1. Pay the INR 60K and get the car in your custody. You can even do this without using your liquid money. Plan to pay through your Credit Card such that you sell off the car within the credit period.
2. With this money, clear off the loan and I'm sure you'll be able to recover your INR 60K from that as well.

Mental peace is much more valuable than Money!

Cheers,
Amey

[Ritkon]

Going through your post, here is my take on the issue:

1. From your post, it seems that the recovery agent is simply asking for the defaulted amount from the guarantor. Now it may be distressing for your family, but he is within his right to do so, as long as he is not unnecessarily aggressive or abusive. Going to the police may complicate the matter, as the loan agencies have a much better idea of the legal procedure than you do.

2. Do not even think about paying the 60K to release the car from the service center. Your liability is for the 1.3 lakh due and not the 60K. If you do so, in the worst case scenario, you may end up paying 60K + 1.3L and in return, your father's partner will get back his car.

3. In case you want to get rid of the issue immediately, pay the 1.3L if possible to the loan agency. If possible, call your father's partner and try to sweet talk him into a deal. Tell him that you will pay the 1.3L on his behalf as an interest free loan to him for a certain period and get him to sign a legal contract with you. If he doesn't pay up to you, a police complaint can be lodged against him, and you will be in the driver's seat (sorry for the pun).

4. Try to sweet talk with the loan recovery agent also. Give him a nice treat and tell him you will not be able to pay the full amount. Give him a realistic number you can pay and try to reduce the repayment as far as possible. Remember, they too need the money and since it is largely the interest amount left at the end of loan tenure and they have provisions for incidents like this, and can reduce it significantly. If possible tire him out, until he agrees to your number.

I feel really sorry for your predicament, but consider the money you will be spending as an important lesson in life and move on. Money, can be earned back and losses recovered. But time and peace of mind cannot be.

[Mustang_Boss]

Originally Posted by 5haS_0209

But since they all are in the same network, can't they repossess the vehicle and sell it off? The one thing I don't understand is my dad's partner is still in town and they know his place of residence, office and every other detail about him. They also know where his car is. Then why do they pester the Guarantor? My mother's mental pressure has gone up because of this issue going on.

Your liability by law comes into picture only when the person who took loan has absconded and the vehicle is not traceable. The guarantor is just liable if the vehicle & owner are not traceable.

If the vehicle is in Mahindra service center and the vehicle is hypothicated to them, why are they even troubling you? Please tell them that, in this case, they should pursue the issue on their own as they have access to the vehicle and the person who took the loan.

Do not even think of paying even 1 rupee. The issue is in mahindra's control & they should be able to fix it.

[ganeshk4]

Originally Posted by Amey Kulkarni

[*]Pay the INR 60K and get the car in your custody. You can even do this without using your liquid money. Plan to pay through your Credit Card such that you sell off the car within the credit period.

That would be a problem, since the car is still on hypothecation. OP would need bank noc for transfer and would not be possible.

[autotranny]

Originally Posted by Amey Kulkarni

Don't waste your time with your dad's partner. He's not going to do anything.

My take :

1. Pay the INR 60K and get the car in your custody. You can even do this without using your liquid money. Plan to pay through your Credit Card such that you sell off the car within the credit period.
2. With this money, clear off the loan and I'm sure you'll be able to recover your INR 60K from that as well.

Mental peace is much more valuable than Money!

Cheers,
Amey

You think the service centre will hand over the car to anyone paying 60,000 ? And how do you sell the car when you are not the rightful owner. Only the defaulting partner is the rightful owner of the car and only with his authorization can a sale happen.

Best advise is to meet a lawyer, send across a notice to Mahindra Finance that the borrower has the capacity to repay the loan; i.e that he is a wilful defaulter and not an insolvent. Go in person to Mahindra and make your stand clear that you are not intending to repay as long as the primary borrower is solvent. Also parallelly file a complaint to the concerned authorities in Mahindra and RBI on harassment from loan recovery agents.

Also, I get a sense from your post that they are not really harassing you, they are just showing up at your door and requesting you to pay. They are just doing their job. As bankers, we have all been forced to do that - not that we enjoyed any bit of that.

[TheBigV]

When it comes to consumer loans, first step the bank/financing institute has to take is to seize the asset and try to recover maximum possible value. If there is any shortfall in outstanding amount, then only they can approach borrower/guarantor. Please go to a decent lawyer and get a strongly worded notice sent to Mahindra Finance. They will not trouble you then.

[Amey Kulkarni]

Originally Posted by ganeshk4

That would be a problem, since the car is still on hypothecation. OP would need bank noc for transfer and would not be possible.

While selling the car, the new owner can transfer the outstanding amount to the bank for the NOC and remaining amount to the OP.

Originally Posted by autotranny

You think the service centre will hand over the car to anyone paying 60,000 ? And how do you sell the car when you are not the rightful owner. Only the defaulting partner is the rightful owner of the car and only with his authorization can a sale happen.

I understand. However, Guarantor cannot be treated as a scapegoat. The car needs to handed over to the guarantor if INR 60K is to be paid or else let it rot at the Service Station.

Even to sell the car, there must be some provision for the Guarantor in case the EMIs are defaulted else what's he signing on! Blank cheque?

Cheers,
Amey