The death of a loved one or friend is always a tragedy. But sometimes it raises more unpleasant questions that relate to finance. And no, this is not about inheritance, but about loans. Nowadays, many use the services of banks - draw up mortgages, loans. But who repays the loan in case of death of the borrower? Well, there is an answer to this question.
Who is responsible?
The topic is actually complicated. The answer to the question of who pays the loan in case of the death of the borrower depends on the mass of nuances. And they need to be listed.
So, the most common case - the debt is inherited. Suppose an elderly man died who had a son, and he bequeathed to him his savings and property. But along with this person the duty of his parent also goes to him. What to do?
First, wait for the inheritance rights to take effect. This usually occurs 6 months after death. During this time, the heirs share the property and debts of the deceased. If they conscientiously agree to repay a loan, the loan agreement is reissued. Although most often the bank is not going to wait for the expiration of 6 months and begins to demand payments immediately. But! In any case, the heir pays the debts of the relative according to the amount of property that he received. If, say, he got 300,000 rubles, and the deceased owes a million to the bank, he is not obliged to give his own money to pay off.
With a pledge
This is not all you need to know about who pays the loan in case of death of the borrower. What to do if the loan was executed by the deceased on the security of the acquired property? Apartments, for example, or a car? In this case, the heir gets the subject of the pledge and the right to dispose of it of his own free will. And there are two options. And here they are:
- Pay off the remaining debt. To use a purchased car or live in a given apartment issued by a relative in a mortgage.
- Sell collateral. So it will be possible to kill two birds with one stone - to close the debt and take back the "profit".
By the way, there are situations when it turns out that the property and the savings of the deceased are issued to someone who is not yet an adult. Who repays the loan in case of death of the borrower in this case? Parents or guardians of a minor. But at the same time, the bank takes into account each legal action. Since it is important that nothing goes against the rights of minors.
In the case of an insured loan
This is a special situation. If the loan issued by the person who left this world was insured, it will be easier to repay it than in other cases. Why? And because the company that insured the loan will deal with this. However, there are pitfalls.
Nobody wants to part with their funds, especially insurance companies, and there is a huge probability of failure. The company simply may not recognize the death of the debtor as an insurance situation! This occurs when a person has died:
- In a war or in a maximum security prison / colony.
- During an extreme sport (diving or skydiving).
- Due to infection with radiation or a sexually transmitted disease.
If the case does not correspond to any of the above, the insurance, not wanting to pay the debt, may refer to the fact that a person left this world due to a chronic illness. If, for example, he died due to alcohol poisoning, then the agents are quite capable of claiming that it was because of his unhealthy liver. Smoked a lot? Then everything will be written off for congenital heart diseases. But this is usually done by unscrupulous companies. Those firms that occupy the first lines in reliability ratings are conscientious.
Guarantee
And what about how the loan is paid in case of death, if it was not insured? This is the very situation that was described at the very beginning. Debt is inherited. But a special case is one when, when applying for a loan, a person turned to the guarantor for help. This is a volunteer, usually included in the circle of close people, guaranteeing the solvency of the loaned. Not everyone agrees to play his role, because if something happens to the person, the debt will fall on the shoulders of the guarantor. He will need not only to repay the debts to the bank, but also all the prescribed interest and expenses spent by the creditor to bring the surety to responsibility.
Guarantor Compensation
And there are some nuances. For example, a loan was issued by a person who has quite adult working children - heirs. But his guarantor was a close friend. What then? In this case, the debt must be paid by the heirs. But if they are unscrupulous, they can simply ignore it. And then the guarantor will need to "pay the bills". But! He has every right to demand from unscrupulous heirs compensation for material damage in full, by contacting the courts. True, this is only after repayment of the loan.
What should be remembered?
There are still a lot of nuances regarding the question of who will pay the loan in the event of the death of the borrower. Here is one of them: the bank, despite the death of its client, continues to charge interest. There are reasons for this. The heir, according to the rules, begins to answer for the debts of the deceased from the day that he left this world. But still, certain charges, forfeit and penalties can be challenged and canceled. However, for this you must go to court. But usually, if the borrower paid the debts properly and showed good faith, the bank considers this as a good reason and late payments due to death are canceled.
Actions
However, it’s not worth delaying anyway. Who will pay the loan in case of death of the borrower, if not the heir? Nobody, therefore, you need to collect your thoughts and follow this instruction:
- First get a death certificate.
- Then - contact the bank in order to report what happened. It is best to come to the department, and immediately with a death certificate.
- Then you need to go to the notary public. There, a statement of acceptance of the inheritance is drawn up and certified.
- The next stage is a six-month wait. As already mentioned, after 6 months, a person will enter into the rights of an heir.
- Then you need to prepare a tax return in order to pay a certain percentage of the inheritance.
- After this, the person must again go to the bank to reissue the loan agreement and proceed with the payment of debts.
As you can see, nothing complicated, therefore it is advisable to deal with the resolution of these issues as soon as possible. The loan and the death of the borrower are big troubles, a huge disaster, but the sooner a person starts the above actions, the better.
How to avoid liability?
The above recommendations can help people who are faced with the problem under discussion. But is it necessary to repay the loan in case of death of the borrower? “Surely you can somehow avoid this?” - Many people ask this question. Well, really possible. To do this, the heir must refuse all property that was bequeathed to him. For six months.
Before deciding on this step, it is necessary to think over everything, since the refusal of the bequest property is not subject to change or return. A minor, by the way, can refuse an inheritance only if he receives official permission from the guardianship authorities.
But what if the guarantor of the borrower who left this world also died? This happens, however, very rarely. In such situations, the debt is not transferred to other heirs and his close people. What happens to a loan in case of death of a borrower and guarantor? This should already worry the bank's management - most likely, they will look for heirs.
Information for co-borrowers
Now, loans can be issued with someone. With a relative, of course, or with the official “soul mate”. Then two people who decided to apply to the bank for a loan become co-borrowers. But if it happened that one of them died, who would pay?
Paying a loan in case of death of the borrower will still have to. There are three options. And here they are:
- The co-borrower goes to the bank with a death certificate and renegotiates the loan agreement. As a result, all debts fall on his shoulders.
- A person finds someone who can help him in payments. That is, to become him a new co-borrower. However, he and his income must comply with the requirements of the bank.
- The co-borrower decides to abandon half of the debt belonging to the deceased, and continues to pay only “his” part.
The latter case is special. So, for example, if the co-borrowers issued a targeted loan for the purchase of an apartment, the bank will sell the housing. With the proceeds, he will pay off their total remaining debt. But the part that was previously paid by the co-borrower who is alive will be given to him.
About violations
Some people who inherited not only inheritance, but also loan debts, decide to “outsmart” the bank. They do not refuse the property they have been given, but they do not do any of the above to renew the loan agreement. In this case, the bank contacts the executive service. And then the heir, sparing money for paying debts, will need to answer before the court and go broke not only to repay the loan and interest, but also to recover the financial costs of the bank. Otherwise, there is a risk of losing property. The bank can simply sell it in order to recover its losses.
However, if the lender did not declare himself within six months after the death of their client, the loan is canceled. This must also be remembered.