After going through the pain of losing a loved one, family members have to take care of all the legal procedures in Bank entities. One of the issues of greatest concern is whether the debts of the deceased automatically disappear or what the possible financial repercussions are.
In this article, we explore what happens to debts when a person dies and how it affects family members. It is vital to know whether debts are passed on to heirs, who is responsible, and what options exist for managing these obligations. This knowledge is key to planning and ensuring that loved ones do not face additional financial hardship at an already difficult time.
What happens if I have a bank debt and I die?
When a parent dies with outstanding debts, the situation can be complex. Life insurance plays a crucial role in this scenario. This insurance, mandatory in many bank loans, exempts the heirs from the responsibility of settling the debts of the deceased.
According to SBS (Superintendency of Banking, Insurance and AFP), this insurance covers debts acquired with banking entities in the event of death or total and permanent disability, thus providing important protection for heirs.
In the absence of such insurance, the heirs must assume the debts of the deceased, but are not obliged to use their own resources. Lorena Fernández, a lawyer specialising in family law, explains: “When a person dies, the debts are inherited according to the estate left by the deceased, in accordance with article 871 of the Civil Code.” Thus, the debts are paid proportionally according to the inheritance received.
What type of coverage does life insurance offer?
According to the SBS, the life insurance offers two types of mandatory coverage: basic life insurance and life insurance with refund. The most common type is basic life insurance, which covers death and disability. In the event that the policyholder is unable to generate income due to death or permanent disability, the insurance company assumes the balance of the debt, preventing the family from having to pay, explains Eduardo Chávez, legal manager of Apeseg.
On the other hand, the tax-refundable policy covers death, disability and survival. If the policyholder dies or becomes permanently disabled, the insurer pays the balance of the debt to the bank and gives the difference to the legal heirs of the policyholder.
Can I avoid inheriting a debt?
Inheriting debt may seem inevitable, but there are circumstances in which it is possible to avoid this burden. According to the Civil Codedebts are inherited along with the deceased’s estate, unless they have expired. This means that, if there are no pending lawsuits and at least 10 years have passed, the heirs can avoid assuming the debts.
However, attorney Fernandez points out that to avoid inheriting debts, a careful analysis of the deceased’s financial status and the specific conditions of each debt is necessary. It is crucial to have legal advice to determine the best way to handle this situation and protect the heirs.
Source: Larepublica
Alia is a professional author and journalist, working at 247 news agency. She writes on various topics from economy news to general interest pieces, providing readers with relevant and informative content. With years of experience, she brings a unique perspective and in-depth analysis to her work.
