How can I handle a loan dispute and avoid court action?
I borrowed 60,000 rupees from a friend and pledged a gold chain worth 1.18 lakh as collateral. Our agreement, recorded on my Aadhaar card, required me to pay 10% monthly interest until the loan was fully repaid. Unfortunately, I was compelled to sell the gold chain back to my friend for only 3,000 rupees due to unforeseen circumstances. I have already repaid 40,000 rupees of the principal and approximately 15,000 rupees in interest. However, my friend is now threatening to take me to court. I am extremely distressed and seeking guidance on how to proceed.
First, collect the documents pertaining to the repaid money and the sold chain for ₹3,000. You have repaid ₹40,000 as principal and ₹15,000 as interest, so you need to talk to your friend and see the settlement amount, keeping in view your financial condition. If he threatens to take legal action, you may remind him that loan defaults are civil matters and no imprisonment is possible in such cases. Consult a lawyer and prepare a proposal for an amicable settlement with a structured repayment proposal to avoid further deterioration.
First of all, document the repayment and the sale of the gold chain for ₹3,000. You have repaid the principal amount of ₹40,000 and interest amounting to ₹15,000; thus, discuss the settlement of the remaining amount amicably with your friend. In case your friend threatens you with a legal case, then consider a payment plan or mediation. Legal action can be made a civil suit for recovery, but real financial stress is a mitigating circumstance. Consult a lawyer for the right advice and to determine rights and obligations in regard to the agreement.
Sir, you should consult a lawyer to review the agreement, as the 10% monthly interest might be considered illegal. Selling the gold chain for just 3,000 rupees could lead to issues. It's best to try mediating a solution with your friend. If the case goes to court, the excessive interest may be reduced. For further legal assistance contact us on our helpline number.
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