What is a CIBIL Suit and How to Remove a Suit Filed in the CIBIL Report?

A CIBIL suit is a legal process that lenders use to recover money owed from unpaid dues, denoting legal action taken against the borrower. It reflects on their CIBIL report, hurting their credit score and negatively impacting their chances of getting credit in the future. Removing it involves clearing your dues, getting a No Dues certificate, and filing a dispute with CIBIL. Keep reading to know more.

What is a CIBIL Suit?

When a borrower fails to repay debts, either from an unpaid loan or credit card dues, the recovery process involves the lender initiating legal action in a court of law by filing a suit. The lender then informs TransUnion CIBIL (Credit Information Bureau India Limited), responsible for maintaining comprehensive records of an individual’s credit history. Lenders refer to this history, reflected in a CIBIL report, to determine the creditworthiness and risk level of each borrower.

When informed of a suit by a lender, CIBIL flags it on the individual’s report as a “Suit Filed” status. It will be displayed under the ‘Account Information’ section of the CIBIL report. This information is only modified when the lender notifies CIBIL or India’s credit bureau that a recovery suit has been filed.

The tag is more severe than a late payment or default remark because it shows that the matter has been legally tackled, severely impacting creditworthiness. The status becomes a signal for all other lenders that the borrower is high-risk, making it tougher to avail credit.

How to Remove “Suit Filed” in your CIBIL Report?

Follow these steps to remove Suit Filed from your CIBIL report:

Step 1: Get your CIBIL Report

You can easily obtain your report from the official CIBIL website. The steps are simple:

• Visit CIBIL’s official website and login
• Choose the ‘View CIBIL Report’ page
• Fill in the required information and identity verification to view your report

Step 2: Identify the Status

Analyse your report; check the ‘Account Information’ section for account remarks such as “Suit Filed” and “Wilful Default”. Make sure to note down the lender’s name, date, amount due, and the status of the suit, whether pending, resolved, or closed.

Step 3: Verify the Filed Suit’s Accuracy

If you’ve defaulted on a loan or missed your credit card payments, the suit will be there for good reason. However, in some cases, a suit could be the result of reporting blunders. If the status seems unjust, you can raise a dispute with CIBIL using their official portal. Provide copies of relevant documents that support the dispute, such as payment receipts, NOCs, or closure letters. Also reach out to the lender’s customer care, share relevant reference numbers, and ask them to remove the notification if the suit filed is incorrect.

Step 4: Taking Action on Valid Cases

If the suit filed is valid, reach out to the lender to confirm the reason, be it untimely payments, cheque bouncing, or pending dues. The aim here is to try to come to an agreement. Recourse through the legal system is rarely the first choice, and lenders usually prefer out-of-court settlements or repayment strategies.

Full repayment is typically optimal for credit health, but you can also try your luck with negotiation and settlement options. If you settle the loan with a lower amount, the report will indicate a “settled” status as opposed to “closed.” While this situation adversely impacts credit score and can still be perceived as a warning sign, it is largely regarded as better than an unsolved legal case.

Also Read: What Happens If You Miss a Personal Loan EMI Payment?

Step 5: Obtain Closure Confirmation and Raise a Dispute with CIBIL

After resolving your outstanding dues either through full repayment or a negotiated settlement, request a ‘No Dues Certificate’ (NOC) or written closure confirmation from your lender. Then, navigate to CIBIL’s Dispute Resolution portal, select the relevant account, and file a dispute case with the reason provided (e.g. dues cleared, suit resolved).

CIBIL doesn’t allow direct uploads but will reach out to the lender for confirmation. Once verified, CIBIL will remove or update the “Suit Filed” remark from your report. It usually takes 30 to 45 days, so regularly check your CIBIL report for updates.

Step 6: Recheck Your CIBIL Report

After receiving confirmation that the correction has been made, get a fresh copy of your CIBIL report. Verify that the “Suit Filed” status has been removed, and no further adverse entries remain. If any issues persist, follow up with CIBIL and keep all records of your correspondence.

Step 7: Get Legal Help if Necessary

If your dispute drags on or you face repeated rejections from CIBIL or the lender, seek legal counsel. A credit lawyer can represent you in negotiations or, if required, help you get a legal clearance document from the court.

Also Read: How to Check & Download CIBIL Credit Report Online

Consequences of Leaving a “Suit Filed” Status Unresolved

Leaving a “Suit Filed” status unchecked is highly detrimental. Besides the immediate drop in your CIBIL score, your report can remain negatively flagged for up to seven years, even after you resolve the debt. You may be denied loans, credit cards, or even find renting a home or securing certain jobs difficult.

Even when lenders decide to extend credit, it will be under more restrictive terms, not to mention the exorbitant interest you’ll be charged. For entrepreneurs, your access to Business Loans or trade credit can be blocked. Removing the tag as soon as possible is the best way to restore your financial health.

Best Practices to Prevent a CIBIL Suit

• Always pay your EMI and loan instalments on time, even if it’s a minimum payment.
• Regularly check your CIBIL report for incorrect entries and raise disputes early.
• Maintain a balanced credit mix and try not to avail too many loans at once.
• Communicate proactively with lenders if you’re unable to pay dues and request restructuring or temporary relief rather than defaulting.
• Retain all NOCs and payment receipts for your records.

Also Read: How to Read CIBIL Information Report?

To Conclude

Having a CIBIL suit filed against you can be a major roadblock to your financial goals. By being proactive, checking your reports constantly and being in touch with your lender and clearing dues, you can stay in the clear. Restoring your credit score post the suit is equally important to ensure that you continue to reap rewards and get the best possible offers on your loans.

Frequently Asked Questions

Is it possible to instantly remove the status of “Suit Filed” from CIBIL?

No, the status of “Suit Filed” cannot be removed instantly. This is a legal mark that a lender reports, and CIBIL will remove it only as and when the lender confirms. CIBIL only updates or removes the remark once the lender confirms it, which may take a maximum of 30 to 45 days.

What is the process to remove a “Suit Filed” status from CIBIL report?

In this case, to initiate removal, the outstanding dues must be paid, a No Dues Certificate (NOC) or closure confirmation is procured from the lender, followed by raising a dispute on CIBIL’s official website.

Is there a publicly accessible defaulter’s list maintained by CIBIL? 

No, CIBIL does not have a publicly accessible “defaulters list”; an individual’s credit history remains private and stays reflected on their own credit report. The report is only accessible by the individual themselves, authorised lenders, and other authorised entities with legitimate requirements to access the report.

Does my score get affected with a “Settled” status?

Although less severe than the active “Suit Filed” or “Written-off” status, a “Settled” status is negative. It depicts a situation where the loan or dues are considered closed with a settlement or partial payment instead of full repayment. As a result, it remains a negative mark on your credit report, and your CIBIL score may remain affected for up to 7 years. Most lenders tend to view it with caution as it is indicative that the borrower faced challenges meeting financial obligations. 

Can I get a loan with a “Suit Filed” status?

In most cases, you’ll receive loan rejections with a “Suit Filed” status. Most banks and NBFCs consider this to be a huge red flag, as it denotes some form of inactive legal dispute because of loan default. If you happen to get lucky with approval, the loan is bound to have higher interest rates, stringent eligibility criteria, and unfavourable terms.