Rehma Kredi
RK is a respected credit advisory service operating nationwide in India, committed to aiding clients in attaining favorable credit standings and financial autonomy.
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SUIT FILED
A lawsuit filed signifies that the lender has initiated legal proceedings against the borrower due to missed loan payments. These missed payments may arise from various factors, including intentional default or financial difficulties. Following the filing of the lawsuit, the lender informs CIBIL and other credit rating agencies about the legal action.
When CIBIL or any credit rating agency marks a loan as being subject to a lawsuit, the borrower is left with two choices: either to pay off the loan in full or to reach a settlement. To close the loan account, the borrower must make a complete payment of the outstanding balance to the lender, resulting in the loan status being updated to closed. It is advisable for the borrower to avoid opting for a one-time settlement with the lender. If a loan account is settled, CIBIL and other credit rating agencies will report it as settled, which adversely affects the CIBIL score and credit report. A settled status on a CIBIL report can lead to a decrease in the credit score.
Creditors or debt collectors may utilize the CIBIL lawsuit to recover overdue debts. The CIBIL report will show the loan associated with the lawsuit for seven years after it has been reported to CIBIL. This can significantly impact your ability to secure loans, credit cards, and other financial products.
You have the option to present your case in court by explaining your inability to repay the loan amount borrowed from the lender.
The ramifications of a person being labelled as a wilful defaulter are wide and drastic. Such declaration sounds the commercial death knell of the borrower in the sense that credit facilities would no longer be available to such borrower. Not only would such a borrower be deprived of credit facilities from banks and financial institutions but is likely to be also deprived of credit from any other person with whom it may be having financial / commercial dealings. The suppliers of goods and raw materials to such borrowers would stop supplying goods and raw materials on credit and would insist upon delivery against payment. Not only so, such declaration as a wilful defaulter, which is put in public domain, is also injurious to commercial goodwill and reputation of the borrower, likely to make anyone weary of dealing with the borrower. All this is likely to lead to cessation of the business of such a borrower
What Are The Consequences If A Lawsuit Remains On Your CIBIL For An Extended Period?
A CIBIL lawsuit appearing on your credit report for an extended duration can adversely affect your financial well-being. It may categorize you as a high-risk borrower, leading lenders to either deny your loan application or offer loans at elevated interest rates, or both. Additionally, it could hinder your chances of securing employment, renting a home, or obtaining approval for a mobile phone contract.
