The horrific spread of the Corona epidemic has killed lakhs of people in the country. Many families have lost their heads. If such people leave some assets with them, then all kinds of liabilities too. In such a situation, the question arises that what will happen to the liabilities like home loan, credit card of people who die suddenly? Will it have to be paid by the family or is there any other way.
Experts say that when it comes to loans, all types of loans are not the same in this matter. In case of home loan, auto loan, recovery of loan is easy for banks, finance companies, as assets are linked in this case, but there is a slight difference in case of personal loan, credit card loan etc.
Home Loan: Home loans are very long term loans. That’s why banks keep such a system, keep the structure of the loan in such a way that the recovery of the loan is not affected in the event of the death of the borrower. Banks keep the spouse or any other family member as a co-applicant in such loans. Not only this, many times it is also seen whether the borrower has an adequate insurance policy or not.
So if any co-broker dies, then the responsibility of repayment of the loan falls on the other co-broker. In such a situation, if someone’s family member dies and he is a co-borrower with him in any loan, then he should inform the bank or the lending institution about the death of his fellow borrower. If the EMI of the home loan or other loan was being deducted from the account of the deceased person, then first of all it should be changed and the name of the deceased person should be removed. The co-borrower should make the payment from his own account.
How to get rid of loan burden: If the home buyer dies suddenly, repaying the outstanding loan can become a huge burden for the family. But most of the loan takers have taken a good term policy for themselves or have the loan insured. So if the family does not know about it, then they should find out by looking at documents etc. Such people can easily pay off the outstanding loan by getting the sum insured and become completely debt free.
Certified Financial Planner (CFP) Pankaj Mathpal explains, “The bank or other lender gives time to the co-borrower to get the amount of insurance etc. to repay the loan or pay the EMI itself. Assuming that someone’s spouse like husband or wife is not in a position to repay the loan, then his sons and daughters can also repay it. Banks can decide the EMI for the son or daughter by looking at their credit rating and make them co-applicants for the loan. If no one is in a position to repay the loan, the bank can take possession of the property or house. The bank has this right under the Sarfaesi Act. He can auction this house and recover his dues.
Personal Loan/Credit Card: Personal loan and credit card borrowings are classified as unsecured loans, if the borrower dies, the bank or other credit card companies write off the loan i.e. write off the loan. puts it. The legal heir cannot be compelled to repay this loan. Even in the case of personal loans, companies often see that the borrower has an insurance policy. On the death of the borrower, the insurance companies try to recover their amount from this insurance company. If the family is ready to return the personal loan on their own will, then it does not matter, but the bank or the company cannot force them to do so.
Vehicle Loan: In case of vehicle loan, in case of death of the borrower, the lender first contacts the family members and asks them to repay this loan, but if the family is not ready for it, then the company takes possession of the vehicle and its Auction recovers its dues.
Education Loan: Education loan is not given without any guarantee. Not only this, if the loan amount is high, then many times the parents also have to give collateral. Therefore, if the student who took the loan unfortunately dies, the bank asks the guarantor of this loan, that is, his/her guardian to pay the outstanding amount. In case of non-payment of loan, the property held on security can be auctioned.
