If you ask me, are personal loans dischargeable, I will say, Yes. Many personal loans in India are potentially dischargeable in bankruptcy, but it depends heavily on the legal system, the type of bankruptcy, and how the loan was obtained.
Personal loans are typically unsecured debt, meaning they aren’t backed by collateral. In many bankruptcy regimes, unsecured debts are prime candidates for discharge.
Most unsecured personal loans can be wiped out after selling non-exempt assets. Loans may not be discharged immediately; they are included in a structured repayment plan. Residual balances may be discharged once the plan is completed.
Is a Personal Loan Dischargeable in India?
Yes. But, not all personal loans are dischargeable:
Loans obtained through fraudulent means exaggerating income or lying on the application, may be challenged and denied discharge.
Debts incurred shortly before filing for bankruptcy, especially for “luxury goods” or large cash advances, may not get discharged if the court views them as abuse.
Under Indian law, when borrowers are unable to repay personal loans, lenders can initiate recovery via court, or even take insolvency action under relevant insolvency provisions.
A borrower may file for bankruptcy (insolvency) in India through the National Company Law Tribunal (NCLT), which can result in the liquidation of assets and possible debt discharge if the borrower qualifies. However, discharging a personal loan is not automatic. Legal, financial, and negotiation routes are complex.
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Are Personal Loans Dischargeable?
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2025-11-24T07:26:40+00:00 2025-11-24T07:26:42+00:00Comment
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