Frequently Asked Questions
Debt Settlement Questions, Answered Honestly
Straight answers about debt settlement in India — legality, CIBIL impact, settlement percentages, fees, the NOC process, and your rights against recovery-agent harassment.
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Debt Settlement Basics
What is debt settlement?
Debt settlement is a negotiated agreement in which your lender accepts a reduced lump-sum amount to close an outstanding debt. Instead of repaying the full balance with accumulated interest and penalties, you pay an agreed one-time amount — often 40–75% less. It is used when a borrower is in genuine financial hardship and unable to service the loan.
What is a one-time settlement (OTS)?
A One-Time Settlement (OTS) is the formal term banks and NBFCs use for debt settlement. The lender's OTS or compromise-settlement policy lets them accept a single reduced payment to resolve a non-performing account. Once you pay the agreed amount, the lender closes the account and issues a settlement letter and No-Objection Certificate (NOC).
What types of debt can Due Dost settle?
Due Dost handles unsecured debts: credit-card dues, personal loans, business loans, app-based and instant loans, and NBFC loans. Multiple loans can be consolidated into one settlement plan. For secured loans such as car or home loans, we assist with closure and NOC rather than reduction, since the lender holds collateral.
How much can I save through a settlement?
Indian lenders typically settle unsecured dues for 40–75% of the outstanding, depending on how old the account is, the total amount, the lender's policy, and the strength of your hardship case. Older, written-off accounts often settle for less. The exact figure is confirmed only after the lender approves a negotiated offer.
Legality & Safety
Is debt settlement legal in India?
Yes. Debt settlement is fully legal in India. Banks and NBFCs routinely resolve defaulted accounts through negotiated settlements, and the RBI's compromise-settlement framework explicitly permits lenders to settle non-performing assets. Due Dost negotiates strictly within the lender's official OTS process and follows all legal protocols.
Can I go to jail for not paying a loan or credit card?
No. Defaulting on a credit card or unsecured loan is a civil matter, not a criminal offence, so you cannot be jailed for non-payment. Lenders can pursue recovery through civil proceedings. The one exception is a bounced cheque, which can attract liability under Section 138 of the Negotiable Instruments Act. Threats of arrest by recovery agents are usually intimidation, not law.
Is it safe to use a debt-settlement company?
Debt-settlement firms are not separately licensed by the RBI, so choosing a transparent one matters. Due Dost works only within lenders' official OTS processes, charges success-based fees, never asks you to deposit money into private accounts, and documents every settlement with a lender-issued letter and NOC. Always insist on written agreements and avoid anyone demanding large upfront fees.
CIBIL & Credit Score
Will debt settlement affect my CIBIL score?
Yes. A settled account is reported as 'Settled', which lowers your CIBIL score — often by around 75–100 points. However, if your account is already in default or NPA status, your score has likely already dropped. Settlement stops further damage, clears the liability, and lets you start rebuilding, with most people seeing improvement within 12–24 months.
What is the difference between 'Settled' and 'Closed' on CIBIL?
'Closed' means you repaid the full amount owed — the ideal status. 'Settled' means the lender accepted a reduced amount to close the account, which credit bureaus treat as a negative marker. A settled account can later be improved if you clear any remaining balance and the lender updates the status, though this is not guaranteed.
How long does 'Settled' status stay on my credit report?
A 'Settled' status typically remains on your CIBIL report for about 7 years from the settlement date. Its negative impact fades over time, especially as you add positive credit history such as on-time payments on a secured card or small loan. Due Dost guides you through this rebuilding process.
How do I rebuild my CIBIL score after settlement?
Rebuilding usually takes 12–24 months of disciplined credit behaviour: pay every bill on time, keep credit utilisation low, and consider a secured credit card or a small secured loan to build positive history. Avoid applying for multiple new loans at once, and check your credit report periodically to confirm the settlement is reported correctly.
The Settlement Process
How does the Due Dost settlement process work?
Our process has four steps: (1) a free case review where we assess your debts and hardship; (2) we take over lender communication and build your settlement case; (3) our team negotiates a reduced one-time amount with the bank or NBFC; and (4) you pay the approved amount directly to the lender and receive a settlement letter and NOC.
How long does debt settlement take?
Most settlements complete within 3–12 months, depending on the number of lenders, the amounts involved, and how cooperative each lender is. Straightforward single-bank cases can resolve in as little as 30–90 days. Older, already-written-off accounts often settle faster because the lender has already provisioned for the loss.
Do I need to stop paying my EMIs to settle?
Not necessarily — and you should never stop paying on anyone's advice without understanding the consequences. Settlement is most relevant when you are already in default or genuinely cannot keep paying. During a free consultation, Due Dost reviews your situation and advises whether settlement, restructuring, or continued payment is the right path for you.
Will I get proof that my debt is cleared?
Yes. Once you pay the agreed settlement amount, the lender issues a settlement letter and a No-Objection Certificate (NOC) confirming the account is resolved. These documents are essential proof — keep them safely, as you may need them to correct your credit report or answer future queries from the lender.
Fees & Charges
How much does Due Dost charge?
Our fees are transparent and success-based — we are paid a percentage tied to the savings we secure for you, so our incentive is aligned with reducing your dues as much as possible. The exact fee depends on the complexity and size of your case and is explained clearly before you commit. Book a free consultation for your specific terms.
Do I have to pay any upfront fees?
Due Dost works on a success-based model rather than demanding large upfront payments. Be very cautious of any debt-settlement service that asks for heavy advance fees or wants money deposited into a personal account — that is the most common warning sign of a scam. All settlement payments should go directly to the lender.
Recovery Agent Harassment
Can recovery agents call my family or workplace?
No. Under RBI's Fair Practices Code, recovery agents cannot harass, threaten, or publicly shame you, and they cannot contact your family, friends, or employer to pressure you — except to obtain your contact details if you are genuinely unreachable. Any such behaviour is a violation you can report to the lender's nodal officer and the RBI Ombudsman.
What time can recovery agents legally call me?
Recovery agents are permitted to contact borrowers only between 8 AM and 7 PM. Calls outside these hours, repeated or abusive calls, threats, or visits intended to intimidate are violations of RBI guidelines. Document the date, time, and content of such contact — this evidence supports a formal complaint.
How do I stop recovery agent harassment?
First, document every call, message, or visit. Then file a written complaint with the bank's nodal officer, and escalate to the RBI Ombudsman at cms.rbi.org.in if unresolved. For threats or intimidation, you can also file a police complaint. Due Dost's anti-harassment service sends a legal notice to the lender, usually stopping the harassment quickly.
Banks & Loan Types
Which banks and NBFCs does Due Dost work with?
Due Dost negotiates with all major Indian banks and NBFCs, including HDFC, ICICI, SBI, Axis, Kotak, IndusInd, RBL, Yes Bank, Bajaj Finserv, and Tata Capital, among others. We also handle app-based and fintech lenders. If your lender is not listed on our site, we can still help — contact us for a free assessment.
Can app-based or instant loans be settled?
Yes. App-based and instant loans are unsecured and can be negotiated and settled like any other personal loan. These lenders are also bound by RBI's digital-lending and recovery rules, so harassment from app-loan agents is illegal. Due Dost helps settle the genuine dues and stops unlawful collection tactics from instant-loan apps.
Still have a question about your situation?
Every case is different. Talk to our team for a free, confidential assessment of your debts — no obligation.