New Delhi, Feb. 25 -- Kundan Shahi first built LegalPay, a startup that finances litigation, in late 2019, before stumbling upon a different kind of distress: consumer debt. As unsecured personal loans and 'buy now, pay later' credit spread, he began noticing a new kind of client in 2021-borrowers with loans stacked across multiple lenders, slipping into delinquency after covid-era job losses. The borrowers found themselves buried in legal notices from lenders.

"India's credit boom also began creating a repayment crisis, and that's when I realized the potential to build a platform that is primarily designed to support borrowers," Shahi said.

That early exposure prompted LegalPay to explore debt-settlement services for some clients and e...