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What happens to personal loan if a person dies
18-Aug-2023 (In Recovery Law)
My dad had a loan few years back and its in written off status in cibil. dad expired few days back and now People from bank are calling up saying we have to pay the money. we were not aware that he had a loan. what needs to be done. im not in a position to pay any money.
If your father had borrowed loan from a bank duly executing the loan documents, then such a loan becomes a liability on the borrower, sureties and after his death upon the legal heirs. Status in CIBIL is not a criteria for non-repayment of loan. It has to be seen if it has been secured by mortgage of immovable or hypothecation of movable properties. In such instances these properties are liable to be auctioned for recovery of loan arrears, if not repaid by you or other heirs.
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Raghavendra Rao B.K.
Bangalore | 200+ Answers
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What happens when primary borrower dies?
The mortgage continues to exist after the borrower's death, but, unless there is either a cosigner or a spouse who survives, no heirs of the deceased are responsible for the mortgage. 14 Nov 2023
What happens to loans when a borrower dies?
The lender cant demand repayments from the borrower’s family if the borrower dies. In this case, the lender is likely to take the loss and write the loan off as a NPA (non performing asset). Remember that this is for a personal loan instant without security or collateral. 31 Aug 2023
Can loan be recovered from legal heirs?
If the loan is secured
After the death of the borrower, the lender will approach the legal heir in order to recover the amount owed. The lender may auction the pledged asset if the legal heir does not repay the outstanding amount. 7 Sept 2023
How can the loan be recovered after death of principal borrower?
How can lenders recover personal loans after the death of a borrowers? The legal heirs of the deceased are liable for repayment of the loan to the lender to the extent that they receive the Estate of the deceased.
I advise you to meet the bank officials and figure out what is the situation regarding the loan and if it is still active. You will need to obtain the documents and then consult a lawyer. Please do not delay it.
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