What happens to loans and other liabilities after death? In everyday life we rarely think about such things. We think the time will come for that. However, talking to loved ones and, above all, preparing appropriate documents and being aware of the obligations of the heirs is very important. Especially when it comes to a high mortgage loan. The family inherits not only property, but also liabilities and debts. What about the loan after the borrower’s death?
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What about a loan after the death of a spouse? Who does the loan pass to after death?
It all depends on whether the loan was taken out by one or more people. If a loan agreement, e.g. for the purchase of an apartment, was signed by more than one person, e.g. by spouses, the debt is not included in the estate. This means that the debt is transferred to the second borrower. Details of further proceedings depend on the agreement concluded with the bank. For example, you can set a new installment amount or extend the repayment period.
If the loan was taken out by one person, after his death, according to the law, his relatives have three options. They can accept all debts, regardless of the amount. They can reject the inheritance, but also accept it with the benefit of inventory. The latter scenario is a good solution if the family is not sure about the amount of debt, as it will only be obliged to repay the amount of the inheritance received.
The heirs have 6 months to choose one of these options. If they do nothing, it means that they are automatically assumed to have accepted the inheritance with the benefit of inventory
– emphasizes Jarosław Sadowski, chief analyst at Expander Advisors. In some cases, however, the family will not have to repay the debt.
Does the family have to repay the loan after the death of a loved one? Not always
In some cases, the liability may be repaid by the insurer, provided that appropriate credit insurance has been purchased, e.g. when signing the contract in .
The insurer will usually pay off all remaining debt and the loan will cease to exist. However, it may also happen that insurance was purchased whose sum insured was lower than the loan debt. Then the debt will only be partially repaid. The loan will still exist, but its installment will be lower
– emphasizes Jarosław Sadowski. The amount paid to relatives from life insurance purchased by the deceased can also be used to repay liabilities. When concluding a contract, it is worth ensuring that the insurance covers, for example, even in the event of death as a result of illness.
Source: Gazeta
Bruce is a talented author and journalist with a passion for entertainment . He currently works as a writer at the 247 News Agency, where he has established himself as a respected voice in the industry.
