In today’s time, it has become common to take a loan to meet home, car or any other need. But have you ever thought that if a person dies before repaying the loan, then who compensates for that loan? This question is in the minds of many people, especially when the only earning person in the family says goodbye to this world.
In this article, we will tell you what happens to the loan after the death of a person, whose responsibility is made to repay it, and under what circumstances the family does not burden.
What is the rule?
If the loan taker dies, the bank first examines the status of the loan account and sees whether the loan is a single application or a co-application or guarantor.
1. Co-employed responsibility
If the loan is in a joint account, the coal-applicant has to repay the entire loan. This responsibility is legally valid and the bank first contacts this person.
2. Guarder’s responsibility
The bank contacts the guarantor if the co-employer is unable to repay the loan or is not present. The guarantor is the same person who has promised at the time of loan that if the borrower is not repaid, he will repay it.
3. Recovery from legal heir
If the guarantor is also unable to repay the loan, the bank contacts the legal heir of the deceased. It may include wife, children, parents or other heirs.
📌 Important: If the successor has accepted the property as heirs, then that person is responsible for repaying the loan. If he has refused to take the property, there is no obligation to repay the loan on him.
Can the bank confiscate property?
If the coal-applicant, guarantor and legal successor-none of the three is in a position to repay the loan, then the bank has the right that it:
Seize the property,
Auction it,
And recover the loan.
In home loans cases, this house is often seized and the bank charge its amount through auction.
What if there is a loan insurance?
If the person has taken a loan protection insurance while taking a loan, the entire loan is repaid by the insurance company after his death.
In this situation, there is no financial burden on the family of the deceased nor does they have to worry about repaying the loan.
✅ Advice: It is a wise decision to take loan insurance while taking a home loan, personal loan or car loan.
Conclusion
After the death of a loners, the bank recovers the loan according to the legal process. Co-applicant, guarantor and successor-the responsibility of all is fixed in the law. But if loan insurance exists, it can provide great relief to the family.
Therefore, while taking a loan, not only plan EMI, but keep a loan insurance keeping in mind the uncertainty of the future.
