Debt counselling: Sanjay Agarwal

I am doing my MBA in Singapore. I took an education loan for Rs 20 lakh from an Indian nationalised bank last year. My mother was the co-applicant for the loan and my father the guarantor. My parents died in a car accident six months ago. And, I recently discovered that my father, a businessman, had borrowed heavily from private moneylenders. I cannot afford to pay my education loan and his borrowings alone. How do I get out of this debt trap? Can private moneylenders take any legal action against me?
The impact of the death of the co-applicant & the guarantor is that the lender has no recourse to approach them in case of a default, and the entire liability stays with the principal borrower. In this case, since you are the principal borrower, you will have to repay the loan.

Regarding your father’s dues, one will have to study the legal documents that he signed with the moneylenders in terms of the security offered, the liability of successors and heirs in the event of demise, the composition of the business, whether the borrowing was done by the business entity or by him personally, the current business ownership, your financials, etc. This will help offer advise on your liabilities and any legal action that can be initiated, or how you should avoid this debt trap.

Recently, a new credit bureau — Experian — was launched. I read in the newspapers that two more credit bureaus are likely to start soon. Does this mean banks will now have access to four different credit ratings? What if the reports are conflicting in nature?
Banks or financial institutions will have to take membership of at least one credit bureau and different bureaus can have different banks as members. So, a bureau may not have the repayment history of every loan that is availed of from each bank. Credit reports from different bureaus will differ, depending on the methodology followed and the details available. You need not worry about the conflict in the report, as it is only one of the inputs required for a loan approval, which, if required, can be explained.

I have two credit cards. Though I have not defaulted on payments, in the past few months, I got delayed by a day or two. The bank did not charge any penalty, but I was told that late payments are reported to the credit information bureau. Is it true? How will it affect my credit worthiness?
Credit bureaus mirror actual loan repayments and the delays do get reflected. The bureau report is only one of the parameters for sanctioning credit. While generally credit-worthiness does not get impacted by occasional delays of a day or two, it is always advisable to avoid these.

The writer is senior vice-president & group head (retail strategy & branding), Arcil. Send your queries to yourmoney@bsmail.in