What happens if I default on LAP payments?

Defaulting on your loan against property (LAP) equated monthly instalments (EMIs) can lead to serious consequences. If you miss your payment deadline, loan providers typically initiate follow-ups via letters, emails and agents within 15-30 days.

If the delays persist for more than 60 days, the lender may classify your loan account as a non-performing asset (NPA) and initiate loan recall proceedings. This includes issuing you legal notice, making field agent visits, distress calls, and levying high penalty rates.

Ultimately, upon continued defaults for 90 days or more, financial institutions invoke legal remedies like seizing your pledged property's ownership documents and launching SARFAESI proceedings to auction your collateralised asset to recover their loan exposure.

Such property auction proceedings can destroy your reputation, credit score and lifetime savings. To avoid such scenarios, maintain open communication with your loan provider if facing repayment issues. Seek moratoriums or loan restructuring well in advance to avoid loan account failures. Make timely payments as per your signed loan contract to prevent severe financial setbacks.