Loans

Based on the facts shared, it is explained that at present, individual bankruptcy in India is not governed by the Insolvency and Bankruptcy Code (IBC) because the provisions relating to ordinary individuals have not yet been implemented by the Government. Therefore, people like you—who are individual borrowers and not company guarantors—are still covered by the old law, namely the Provincial Insolvency Act, 1920, which is still valid and in force.

Under this law, if a person has taken multiple loans, has no regular income, has lost his job and assets, and is genuinely unable to repay his debts, he can approach the District Court and file an application declaring himself insolvent. This process is meant to help honest people who have fallen into financial trouble and is not a punishment or a crime. Once the court accepts the application, the person gets protection from arrest and forceful recovery for civil debts, and creditors are required to follow the court process instead of harassing the borrower. If the person has any assets, they are managed by the court-appointed officer, and if there are no assets, this fact is also taken into account.

The law also recognises situations where a person has lost the ability to earn due to serious health or mental health problems. In such cases, continuing recovery actions serves no purpose and only causes further hardship. The aim of the insolvency process is to give the person a chance to restart life financially, after honestly disclosing income, assets, and debts. Therefore, in the present situation, approaching the court under the Provincial Insolvency Act, 1920 is a lawful, practical, and reasonable option to deal with debt problems and to stop continuous pressure from lenders, provided all information is given truthfully to the court.