Debt Trap

Realising the urgent need to show heavily indebted farmers a way out of their problem so that they are dissuaded from committing suicide and thereby plunging their families into even greater misery, MASR has prepared a booklet explaining the legal protections available to indebted persons.

This booklet, translated into Punjabi and Hindi, has been much in demand since it was first published in 2004. It is has been distributed through panchayats and gurdwaras. It is now in its third printing.


1. Debtors who have any doubt with regard to the legal position on interest, or who were forced by circumstances to accept a loan at exorbitant interest are advised to file a case before the Lok Adalat. The Lok Adalat has undertaken settlement of rural debt disputes.

2: Alternatively, they may approach the judicial courts for settlement of their debts. Courts cannot compel you to pay back a debt contracted illegally or at illegal interest rates.

3. Lawyers can be hired on commission basis if you have no money for legal fees. If your annual income is less than Rs 30,000, ask the judge for a free lawyer under the Legal Services Authority Act, 1987.

4. Chances are that in order to avoid disclosure of black money, a creditor will agree to an out-of-court settlement of your debt to your advantage.

5. Serve registered notice on the creditor asking for supply of accounts giving details of amount due, amount repaid and interest accrued.

6. Creditors generally take the help of police to recover a loan. Police is not empowered to interfere in civil disputes of this nature. In case of such illegal pressure, the village as a whole should protest and side with the debtor. Respond to police interference by sending a simple application to Punjab Human Rights Commission, SCO 22-23, Sector 34, Chandigarh.

7. In case of compromise with a creditor, have the compromise deal spelled out in writing on stamp paper and witnessed by the village panchayat.

8. Demand return of the pronote or any other document creating liability. Also get back stamp papers taken at time of advancing the loan or subsequently under pressure. In case there are no documents with the creditor take his written statement, attested by the panchayat, that he holds no papers.

Access the Punjabi Version by Clicking here