You’ve been dodging calls for months. Your anxiety spikes every time the phone rings. Finally, an email pops up from the bank.
It’s a Settlement Offer.
You open it. Your eyes go straight to the numbers.
- Total Dues: ₹80,000
- Settlement Amount: ₹27,000
Your heart stops racing. You do the math – that’s a massive 66% discount. You think, “This is it. I can scrape together ₹27k, pay this off, and finally sleep at night.”
STOP.
Before you transfer a single rupee, you need to read the fine print. Specifically, you need to read Clause 8.
If you have multiple credit cards or loans with the same bank (like I did), this letter isn’t a lifeline. It’s a trap designed to bankrupt you while keeping you in debt.
The Smoking Gun: What Clause 8 Actually Says
I received this exact letter on January 20, 2026. I almost signed it. But then I looked closer. Buried in the terms and conditions on the second page was this paragraph:
“It is understood that the Bank’s decision to comply with the Borrower’s request to settle only certain credit facilities does not, in any way, waive or impair the Bank’s rights to pursue recovery of its dues in the remaining outstanding credit facilities of the Borrower.”
Translation: The “Salami Slicing” Tactic
Banks are smart. They know that if you have 3 credit cards and a personal loan, you probably can’t pay them all.
If they asked you to settle everything at once for ₹1 Lakh, you’d say “I don’t have that much money” and pay nothing.
So, they use the Salami Slicing tactic:
- They offer you a great deal on one small card (Card A).
- You use your emergency savings to pay off Card A.
- The Trap: The moment that payment clears, the bank knows you have access to funds.
- The Attack: The recovery agents for Card B and Card C immediately ramp up the harassment. Clause 8 explicitly says they can still come after you for the rest.
But now, you have a problem: You have no cash left. You spent your “war chest” on Card A. You have zero leverage to negotiate for Card B and C.
You are now broke, and you are still being hunted.
The Only Way Out: The “Global Settlement”
When I saw Clause 8, I realized I couldn’t just pay this ₹27,000. I had to change the game.
I had 3 cards. I didn’t want 3 separate battles. I wanted the war to end.
Instead of accepting the offer, I sent a Counter-Proposal. I told them: “I have a limited pool of funds. I will not pay for Card A while you chase me for Card B. Put all three cards in a pile, give me one total number for a Global Settlement, and I will pay it. Otherwise, you get nothing.”
This is how you win. You force them to bundle your bad debt. You use your limited cash as leverage to clear your entire relationship with the bank, not just one slice of the salami.
Don’t Sign Blindly
The banks count on your desperation. They bank on you reading the big bold numbers and ignoring the small text.
If you are holding a settlement letter right now, flip it over. Look for the clauses about “remaining facilities” or “residual rights.”