On March 2024, Our Senior Associate and Head of Banking, Sophary NOY in her capacity presented on a live radio talkshow on air and on Facebook page of Women Radio of Women Media Center with the topic “Claims and Contractual Obligations”.

Sophary has discussed as the following:

Rights and Obligations of Lender and Borrowers Before Entering into Loan Agreement

• Lender’s Rights and Obligations:
  • Duty to disclose loan terms clearly and transparently, including interest rates, fees, repayment schedules, and penalties.
  • Obligation to assess the borrower’s creditworthiness to ensure responsible lending.
  • Right to secure the loan with collateral.
  • Duty to provide accurate information about the loan product.
• Borrower’s Rights and Obligations:
  • Right to clear and understandable loan information.
  • Obligation to provide accurate financial information.
  • Right to shop around for the best loan terms.
  • Duty to understand the loan agreement before signing.

Rights and Obligations of Lender and Borrowers After Signing Loan Agreement

• Lender’s Rights and Obligations:
  • Right to receive timely loan repayments as agreed upon.
  • Obligation to provide clear and accurate statements.
  • Right to enforce the loan agreement in case of default.
  • Duty to treat borrowers fairly and ethically.
• Borrower’s Rights and Obligations:
  • Right to timely and accurate loan statements.
  • Obligation to make timely loan repayments.
  • Right to dispute errors on loan statements.
  • Duty to maintain communication with the lender in case of financial difficulties.

Borrower’s Access to Property During Court Actions

• Explain the concept of foreclosure and how it affects property ownership.
• Discuss the rights of borrowers to remain in their homes during the foreclosure process (if applicable).
• Outline the potential for temporary restraining orders or injunctions to protect borrower’s property rights.

Dealing with Financial Challenges and Lender Rights

• Borrower Actions:
  • Importance of early communication with the lender about financial difficulties.
  • Options for loan modification or restructuring.
  • Benefits of seeking professional financial advice.
• Lender Rights:
  • Right to accelerate the loan in case of default.
  • Right to charge late fees and penalties.
  • Right to pursue legal action to recover the debt.
  • Right to foreclose on collateral if available.
• Initiation of Claims:
  • Conditions that trigger default, such as missed payments or breach of contract.
  • Legal procedures for initiating debt collection actions.

Borrower Protection Against Harassment

• Define harassment and provide examples of inappropriate behavior.
• Outline borrower rights and recourse options, including reporting to regulatory authorities.
• Importance of documenting harassment incidents.

Challenges Facing Lenders in Case of Default

• Economic downturn and its impact on loan repayment.
• Increased legal costs and complexities.
• Difficulty in recovering collateral value.
• Reputation damage due to high default rates.

Remedies for Non-Performing Loans

• Negotiated Solutions:
  • Loan restructuring or modification.
  • Debt settlement or forgiveness.
  • Partial or full repayment plans.
• Legal Remedies:
  • Foreclosure or repossession.
  • Legal action to recover debt.
  • Selling the debt to a collection agency.

Forums for Claims

• Alternative Dispute Resolution (ADR):
  • Mediation and arbitration as alternatives to court.
  • Benefits of ADR, such as cost-effectiveness and efficiency.
• Court Actions:
  • Types of court proceedings for debt recovery.
  • Legal process and potential outcomes.

Navigating the complexities of a loan agreement can be challenging for both lenders and borrowers. It’s essential to understand the rights and obligations on both sides, both before and after the loan is signed. Open communication and a clear understanding of the terms are crucial in preventing disputes.

When financial difficulties arise, borrowers should proactively engage with lenders to explore potential solutions. Lenders, in turn, should consider the challenges faced by borrowers and seek amicable resolutions whenever possible.

While legal recourse is an option for both parties in case of default, alternative dispute resolution methods can often provide more efficient and cost-effective solutions. Ultimately, a balanced approach that prioritizes fair treatment and mutual understanding is key to a successful lending relationship.

By understanding the rights, responsibilities, and available remedies, both lenders and borrowers can protect their interests and work towards mutually beneficial outcomes.

If you have any enquiry regarding bank loan agreement, please contact us: