How to prevent loan default?

Preventing loan default is a big problem especially for individuals, Since, being the part of the legal profession, I take it as my responsibility to ensure that Justice should not only be done, but seem to have been done. In today’s world where most of the financial transactions are done in the name of “friendly loans” without any precautions being taken because of the long lasting friendship and trust factor involved in it. In most of the cases as a matter of precaution a blank cheque is being taken for security purposes, but now the question arises is whether the cheque taken is sufficient to recover the money if the friendly terms do not remain the same as they were when the loan was given. The answer to it is long lasting litigation U/S 138 NIA without any other proof or if the person is lucky enough then settlement. But if the nothing positive happens the money as well as the friendship is gone forever.

Dealing with so many genuine friendly loan cases wherein the hard earned money was given and in token of the same cheques were taken, but still the fate of the cases are same, long pending litigations with no proof to prove the transaction and finally settling the matter with even half the amount to get the money back. In order to ensure the fairness in transaction and having an upper hand it is my humble advice to take the necessary precautions in order to save time, money and friendship for future.


Precautions to be taken while giving friendly loans:-

  1. Always pay the money through cheque or make an account transfer to keep a record of the transaction.
  2. Pay the money which you can justify in the court of law, because in most of the cases the amount paid is so much high that one could not justify as per as his Income Tax Returns.
  3. Make a written agreement; take a pronote and a cheque everything in his handwriting so that he cannot take the defense that his signatures are taken by fraud or forgery.
  4. Keep sending him emails or text messages through whatsapp in such a way so that he admits his liability to keep a record as an evidentiary proof in the court of law, because after the amendment of the Information Technology Amendment Act, even the audio and video recordings are admissible in the court of law.
  5. Last but not the least always makes some witness to the loan agreement, who could not be win over by the other party in the court of law.


Hope you liked the suggestions put herein and they will help you to save your money and friendship as well.


Kapil Chandna Advocate

9899011450, 9911218741


Leave a Reply

Your email address will not be published.