Key takeaways
- Contact the lender before you miss a payment: early talks give more options.
- A loan unpaid for 90 days is classed as a non-performing asset, with serious consequences.
- Full closure is better for your credit than “settled”.
What happens, step by step
- First missed EMI: late fees and reminders. Your account is flagged as overdue.
- 30 to 90 days: the delay is reported to the credit bureaus and your score falls. Calls and notices increase.
- After 90 days: the loan can be classified as a non-performing asset. The lender may issue a legal notice.
- Secured loans: the lender can take action against the collateral under laws such as SARFAESI, after following due process.
- Unsecured loans: the lender can sue for recovery or sell the debt to a recovery agency.
Your rights
- Recovery agents must be polite, show identification and generally call only between 8 am and 7 pm.
- Harassment, threats or shaming in front of others are not allowed. Report them to the lender and, if needed, to RBI.
- You are entitled to know the exact amount outstanding and how it is calculated.
How to recover
- Talk to the lender early and ask about restructuring, a tenure extension or a short moratorium.
- Prioritise: clear the costliest and secured loans first.
- Cut spending and use your emergency fund if you have one.
- Consider a lower-rate loan to consolidate, but only if the total cost falls. Use the balance transfer calculator.
- Settlement is a last resort. A “settled” status stays on your report for years and can make new loans harder. Try for full closure.
Rebuild afterwards
Pay every bill on time, keep utilization low and review your report. See how to improve your CIBIL score.
This article is for general information only and is not financial, legal or tax advice. Interest rates, fees and rules change, so confirm current terms with the lender or the regulator before you decide. Examples use illustrative figures. Last reviewed: October 2026.
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