Wondering what is credit card legal notice?
Well, legal notice for a credit card is usually sent by the banks and the financial institutions when timely payments are not made. In such scenarios, the cardholder becomes a defaulter.
Legal notice for credit card in India is very important. Such legal notices can be presented as evidence in the Court of law. Since legal notice for nonpayment of credit card situations is taken seriously by both banks and Courts.
Be it private banks like HDFC or public sector banks like SBI, legal notice for credit card gives an opportunity to the cardholder to make the payment and avoid being involved in long legal battles.
Legal notice credit card can be sent either by registered post or personally through a person. There is no specific mode for sending a legal notice.
Before we begin explaining the about the process let’s fully understand what is credit card legal notice.
In Crux About Sending a Legal Notice for Credit Card
Usually, before instituting a suit or starting legal proceeding against a person or entity, the banks send a legal notice to the defaulter.
The defaulter gets a prior notice of what is going to happen if he/she does not clear his/her dues.
Banks and financial institutions keep a track on the people or the company who makes default in clearing outstanding dues.
Wilful defaulters are taken seriously by the banks and such people or entity face lot of troubles later while dealing with banks and financial institutions.
While recovering the money due, attach the finances of these defaulters by the banks. Both Government banks and private banks do not grant loans or credit to the defaulters.
In circumstances where the cardholder fails to hold his part, the banks will send a legal notice for credit card payments before starting the legal proceedings.
Courts will take into note whether the ban has sent a legal notice for non-payment of credit card dues while resolving the matter.
Private Banks and financial institutions like HDFC bank also send credit card legal notice if there is any default in payment.
To resolve this issue right, it's always better to consult a lawyer who can guide you on the process elaborately.
Consult: Banking Lawyers in India
Table of Contents:
Why do banks send legal notice for credit card?
No one likes involving in legal proceedings because such proceedings are long and time-consuming. Some of the legal proceedings continue years after years.
So neither banks nor an individual would like to get involved in long and lengthy legal battles. So banks or financial institutions send a legal notice for credit card payment to the defaulter.
By following this custom the banks are giving an opportunity to the individual or the corporate defaulter to make the payment and avoid getting involved in the lengthy legal proceedings.
Banks or financial institutions send a legal notice for credit card in the following situations:
The cardholder has failed to pay the due money,
or failed to pay the money for more than one occasions.
The cardholder is being given an opportunity to make good his promise and pay the money that is due to the bank.
The bank is giving a warning before instituting a legal suit against the defaulter.
Importance of sending a legal notice for credit card
The most important factor for sending a legal notice for credit card is to give an opportunity to the defaulter. To make the payment due or settle the matter amicably out of the Court, without involving the legal intricacies.
The banks will send a legal notice drafted after lawyer consultation to the defaulter stating all the facts and liabilities of the defaulter.
There is no specific or exact format for sending a legal notice for credit card payments but the usually the legal notice contains all the facts and views of the sender and the reliefs claimed from the receiver.
The receiver gets an idea of the accusations that one makes against him/her.
The legal notice contains all the grievances that the sender has against the receiver of the legal notice, that is, the defaulter or the cardholder.
So it is important that banks and the financial institutions send a legal notice before instituting a legal suit against the cardholder or the defaulter.
When does a person become a defaulter?
A person becomes a defaulter when he cannot pay the money or clear his dues. This means that the individual or the corporate entity has become financially weak in the market.
The financial condition of the person or the entity is not up to the level where he or the entity can pay off their debts. This does not always mean that the person is not willing to pay or trying to avoid the payments.
When such a situation arises where the defaulter is unable to pay the banks will first send a legal notice on credit card payments and later may file a suit for non-payment of dues.
The legal notice for non-payment of credit card sent by banks and financial institutions should not be taken lightly as they are the first step towards the institution of legal proceedings.
Even the Courts take such legal notices on credit card payments seriously.
Measures available to a defaulter
A defaulter can take the following measures to avoid while legal proceedings:
The defaulter can approach the bank or the financial institution to settle the matter amicably and out of Court.
He/She can request the bank to give some time within which he will clear his dues.
He/She can clear their dues at one go or by instalments but that depends on the discretion of the bank.
Defaulter can write a reply to the legal notice sent to him and let know about his honest intentions to pay and clear his dues.
However, the cardholder must remember that he has been sent a legal notice for credit card payments. Though it is not mandatory, it is advisable that the cardholder sends a reply to the legal notice.
In the reply to legal notice for credit card, he can state his views and intentions. If no reply is sent against the credit card then it can be construed as acceptance of the facts and allegations mentioned in the legal notice.
Such a situation will not be in favour of the defaulter. So it is beneficial for the defaulter that whenever he receives a legal notice for credit card. Then he/she should send an appropriate reply. Such a reply will also act as evidence in the eyes of the law.
How to reply to legal notice for credit card?
However, when you are a defaulter, there are some credit card non-payment consequences in India that you have to face.
To avoid the worst of case scenarios from happening, what can you do?
You can go for a one-time settlement & pay the amount in one go or discuss in terms of monthly instalments for a short duration.
Usually, the bank removes the interest on the amount. It charges only on the principal amount that you need to pay.
Once you receive a notice from the bank, it’s very important to send a reply to legal notice for a credit card. The reply to a legal notice must contain the following points:
Name, description, and place of residence of the sender of the notice.
Details of the cause of action.
The monetary relief claimed by the sender of the notice.
The summary of the legal basis for the relief claimed.