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  • by Krusch Antony
  • 7. December 2018


“Home life ceases to be free and beautiful as soon as it is founded on borrowing and debt”—-Henrik Ibsen.


 Krusch Antony

As a Mediator and an Arbitration Counsel in Finance and Banking for the last 15 years in India, I have noticed that DEBT often becomes a normal part of life that we don’t give much importance, and the warning signals are ignored.  DEBT IS A BURDEN, and it makes the individual, families and a clan sad, angry, scared, depressed and disappointed. Debt keeps one enslaved to a bank or a financial institution or to the state. Debt and stress are like co-joined twins. The very thought of getting a legal notice on default in payment end with shortness of breath, and causes headache, dry mouth, shakes, rapid heartbeat , panic , angry and frustration which leads to migraines, heart disease, hopelessness, despair and further leads to family disturbances including marriage breaks, ruining relationships, and even ethnic-community clashes. Out of control debt problems often push one to bankruptcy, and which in turn impact economic independence permanently.

YOU JUST NEED TO GET OUT OF DEBT. If one is in deep financial crisis, and overburdened with debts, what to do? Where to go? Whom to be approached? Often, in my involvement with financial defaulters, I found that all were jumbled, and finally land with a lawyer, who promises to give a stay of the matter, or for a permanent resolution on the ground of technicalities in litigation process and procedures. Believing the same, the disputants with debt burden, spent lot of money and waste time, and end with compounded delay in penal charges on interest and litigation cost.

DEBT COUNSELING or CREDIT COUNSELING is the only solution for many, and it is suggested by many regulatory bodies in many countries, including in India, by the Reserve Bank of India (RBI). As a result there are agencies under the Financial Literacy and Credit Counselling Centers (FLCCCs) appointed through RBI are established in India. Unfortunately, they are acting as a sponsored body of the Banks and Financial Institutions, and more of a credit counselling center in activity. Debt Counselling is a process that is used to help individual debtors to come out from debt crisis through credit counselling agencies or debt counselors. The method used by these resolution experts will empower the debtors to negotiate in a professional way to come out from debt crisis. The traditional method used by them are awareness creation, education and budgeting. Regulations on debt counselling and credit counselling agencies varies from country to country.

DEBT COUNSELING to be followed by DEBT NEGOTIATION. The debt negotiators like me often proposes  lowering of interest rates, waiving the late payment penalties, options like step-up repayment, loan restructuring, and loan take-over assistance e.t.c. followed by debt consolidation, debt relief and reduction schemes and debt settlement . However, the same is completely depended on In-House Counsels in Indian backdrop. In –House counsels who are trained in Negotiation and Mediation skills do the much expected resolution of disputes in Banking and Finance domain segment is the case study of India.

DUTY OF A DEBT COUNSELOR like us is that: -ensure the evaluation of the financial position of one’s client to find better solutions to manage funds by strategically paying off debts. Empowering the debtor with Self-Help Tools, budgeting, tracking the spending patterns, identifying necessary expenses, and prioritizing the expenses are the traditional tools, to ensure that he or she meet the ends. Debt settlement programmers and Lok Adalaths (people’s court / community dispute resolution clinics) in Indian context, and the use of mediation services are advised to the debtors and creditors.

DEBT MEDIATORS IN INDIA to know the law involved and proceed. Mediation in India is recognized statutorily as Conciliation, in the absence of a Mediation Act. The parliamentary law committee is working on with a Mediation Act for India. The present Conciliation is covered under the Arbitration and Conciliation Act, 1996. A settlement Award by a Conciliator is binding, and can be enforced in a court of Law. Subsequently, the introduction of Lok Adalaths to the justice system in India, for resolutions of pending court litigation, was introduced through Legal Services Society’s Act, 1987. As such, cases can be referred to Lok Adalath with the consent of disputants, or even by one of the party. If court is satisfied, the matter shall be referred Lok Adalath. The settlement in Lok Adalath shall be guided by the principles of justice and equality.  Permanent Lok Adalath ( PLA) in India, provides an opportunity for a disputant to file the application to raise the dispute , and the respondent shall be directed to file a written statement with appropriate proof. Thereafter the PLA shall proceed with Mediation / Conciliation of the dispute, and resolves.

DEBT COUNSELING to NEGOTIATION & MEDIATION—–A Case Study of FLM –Farmer –Lender –Mediation in USA, by the University of Minnesoto, under the Agricultural Credit Act, 1987.

Agricultural Credit Act of 1987 was passed in USA to create a nationwide FARMER-LENDER-MEDIATION (FLM).The programmer is required that Federal agencies to help and facilitate negotiations about credit problems. FLM is having 22 years of history and 35 states in USA participates in FLM.

FLM PRACTICES: – Trained and Neutral Facilitator / Mediator to assist parties for Negotiation in a dispute. The Mediation process followed is confidential, informal, cheap and quick. It facilitate open communication between parties, and create non- hostile environment, and treat parties with dignity with well-defined rights and liabilities of parties and produces agreements that are acceptable to all the parties.

First step in FLM is an ORIENTATION SESSION, where the Mediator and a Financial Analyst meet with the borrower and creditor to explain the process and determine the requirements for financial information or clarity needs to be prepared and explained.

Second step is that the parties sign an agreement to MEDIATE, followed by explaining the confidentiality, immunities to the Mediator, good faith in participation e.t.c.

Thirdly, over a period of 60 days, the borrower / creditor and Mediator meet regularly to design an acceptable agreement.

In 2008, the Minnesoto FLM , opened 2002 mediation cases, and nearly 80% of the mediated cases reached some kind of settlement , which helped the farmers to stay in business , lenders got paid and people stayed in their communities. The total debt addressed in Mediation case session was over 156.3 million US Dollars.

FLM – Minnesoto Extension MANDATES that a creditor with a secure debt for more than 5000 Dollars against an agricultural property MUST offer mediation before proceeding with foreclosure or repossession or cancellation or collection of a judgement against a farmer.

FLM Mediator may advice, counsel, and assist the parties’ ways to come to agreement. Mediation often requires compromise on the part of debtor to change the operation to make it more profitable ; or to liquidate the asset the creditor ( bank) may need to do by restructuring debt and security; or by re-scheduling loan re-payment.

Face-to face joint decision making process, with trust built in are the hallmark of Debt counselling and Mediation. The resolutions found in the process are mutual, self-respecting, and consensual by avoiding the usual tension and frustrations to a win- win debt recovery process.

Thus, the non-adversary process and informal practices, with perceived value of certainty, objectivity, openness, in the mediation process, along with the pre-mediation counselling session, has reposed greater confidence in the minds of debtors to relay upon these alternative procedures and practices over the traditional adversary litigation practices, and the practice of debt counselling cum mediation is all set to inspire the opulence of debtors and creditors equally.


Considering the backdrop of the case study of University of Minnesoto, USA, and my Indian experience in Debt Mediation, I understand that the scope of Mediation, especially with a domain specific Mediation in Banking and Finance , is enormous for India and the rest of the World, in the context of exhaustive process and procedures of litigation in Court of Law.

Hence, DEVELOPING PROCESS & STANDARDS for GLOBAL DEBT MEDIATION is the need of the hour, and the Global Mediation Institutions can take a lead to facilitate DEBT MEDIATION services is recommended, by creating a pool of DEBT MEDIATORS, and by expediting with global standards, process and programmers, in consultation with national rules and regulations in the backdrop of general mediation practices, and to develop programmers in specified regional and cultural environments can be marvelous for the Mediation in the coming days.



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