Debt Mediation – For a debt free world

“Home life ceases to be free and beautiful as soon as it is founded on borrowing and debt” Henrik Ibsen.

As a Mediator and an Arbitration Counsel in Finance and Banking for the last 15 years in India, I have noticed that DEBT often becomes a normal part of life that we don’t give much importance, and the warning signals are ignored.  DEBT IS A BURDEN, and it makes the individual, families and a clan sad, angry, scared, depressed and disappointed. Debt keeps one enslaved to a bank or a financial institution or to the state. Debt and stress are like co-joined twins. The very thought of getting a legal notice on default in payment end with shortness of breath, and causes headache, dry mouth, shakes, rapid heartbeat , panic , angry and frustration which leads to migraines, heart disease, hopelessness, despair and further leads to family disturbances including marriage breaks, ruining relationships, and even ethnic-community clashes. Out of control debt problems often push one to bankruptcy, and which in turn impact economic independence permanently.

YOU JUST NEED TO GET OUT OF DEBT. If one is in deep financial crisis, and overburdened with debts, what to do? Where to go? Whom to be approached? Often, in my involvement with financial defaulters, I found that all were jumbled, and finally land with a lawyer, who promises to give a stay of the matter, or for a permanent resolution on the ground of technicalities in litigation process and procedures. Believing the same, the disputants with debt burden, spent lot of money and waste time, and end with compounded delay in penal charges on interest and litigation cost.

DEBT COUNSELING or CREDIT COUNSELING is the only solution for many, and it is suggested by many regulatory bodies in many countries, including in India, by the Reserve Bank of India (RBI). As a result there are agencies under the Financial Literacy and Credit Counselling Centers (FLCCCs) appointed through RBI are established in India. Unfortunately, they are acting as a sponsored body of the Banks and Financial Institutions, and more of a credit counselling center in activity. Debt Counselling is a process that is used to help individual debtors to come out from debt crisis through credit counselling agencies or debt counselors. The method used by these resolution experts will empower the debtors to negotiate in a professional way to come out from debt crisis. The traditional method used by them are awareness creation, education and budgeting. Regulations on debt counselling and credit counselling agencies varies from country to country.

DEBT COUNSELING to be followed by DEBT NEGOTIATION. The debt negotiators like me often proposes  lowering of interest rates, waiving the late payment penalties, options like step-up repayment, loan restructuring, and loan take-over assistance e.t.c. followed by debt consolidation, debt relief and reduction schemes and debt settlement . However, the same is completely depended on In-House Counsels in Indian backdrop. In –House counsels who are trained in Negotiation and Mediation skills do the much expected resolution of disputes in Banking and Finance domain segment is the case study of India.

DUTY OF A DEBT COUNSELOR like us is that: -ensure the evaluation of the financial position of one’s client to find better solutions to manage funds by strategically paying off debts. Empowering the debtor with Self-Help Tools, budgeting, tracking the spending patterns, identifying necessary expenses, and prioritizing the expenses are the traditional tools, to ensure that he or she meet the ends. Debt settlement programmers and Lok Adalaths (people’s court / community dispute resolution clinics) in Indian context, and the use of mediation services are advised to the debtors and creditors.

DEBT MEDIATORS IN INDIA to know the law involved and proceed. Mediation in India is recognized statutorily as Conciliation, in the absence of a Mediation Act. The parliamentary law committee is working on with a Mediation Act for India. The present Conciliation is covered under the Arbitration and Conciliation Act, 1996….

This article is originally published on World Mediation Organization's Website 

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