1 week Ago
When an individual who has a loan on him passes away with an outstanding amount, it raises several critical questions about the repayment of such debt along with the future course of responsibility for clearing the pending amount. That is why understanding the financial and legal consequences about debt repayment post the demise of an individual is crucial for the deceased’s family and relatives. It can help them in gaining knowledge and dealing with the challenges thrown at them by the concerned authorities in such a situation in an efficient manner.
Loan repayment responsibility after borrower's demise It has been observed that in India, personal loans are mostly unsecured i.e., they are not backed by any form of collateral.
That is why if a personal loan borrower dies then the responsibility for repaying the left out outstanding loan amount doesn’t automatically transfer to the family members or legal heirs until and unless they are guarantors or co-applicants. Still, it is important to remember that lenders can claim repayment of loan from the deceased’s property i.e.
, estate, this includes assets such as: property, gold ornaments, savings or past investments. The legal heirs on their part are obliged to repay the personal loan debt only to the extent of the total inheritance they have received. Now for complete clarity on this issue it will be prudent to reach out to a qualified lawyer who can guide you through the entire process.
Steps for discussing and settling outstanding personal loans Understanding the significance of guarantors and co-signers If a personal loan application had a guarantor or a co-signer, then they naturally become responsible for the repayment of the remaining debt on borrower’s demise. This goes according to the terms and conditions of the loan contract. That is why it is always prudent to be completely aware of the rights, duties and obligations associated with co-signing or guaranteeing a loan.
What are some preventive measures for the borrower's family? Hence, by promptly discussing and addressing these challenging aspects, families and associates of the deceased can mitigate the financial impact of a borrower's untimely demise and help in ensuring a smooth transition during difficult times. Disclaimer : Mint has a tie-up with fintechs for providing credit; you will need to share your information if you apply. These tie-ups do not influence our editorial content.
This article only intends to educate and spread awareness about credit needs like loans, credit cards and credit scores. Mint does not promote or encourage taking credit as it comes with a set of risks such as high interest rates, hidden charges, etc. We advise investors to discuss with certified experts before taking any credit.
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