This article was created because under one of the texts someone wrote “the loan is lost after the borrower’s death” and someone else agreed with this statement. And I can’t let you think that.
The borrower’s death has a significant impact on the situation of the deceased’s heirs. The consequences of the borrower’s death vary – depending on what commitment the deceased incurred (e.g. cash loan), whether and what security the bank has, what the deceased’s family status is, and what heirs have made the decision to acquire the estate .
Your spouse agreed – does he bear the consequences?
Consider the case of a deceased person who was married and took out a cash loan from a bank. Let’s assume that after his death the spouse does not pay the installments. Failure to repay the debt results in termination of the loan agreement by the bank.
In such a situation, the bank has the possibility to claim the entire joint property of the spouses. However, enforcement against the debtor’s spouse’s assets is only possible if the deceased has committed with the consent of his spouse.
Life insurance policy and enforcement proceedings
Assignment of a life insurance policy to the borrower is increasingly used as collateral for the loan. The bank may require such security, e.g. from a single or elderly person.
When the sum insured corresponds to the loan value, the insurance company pays a benefit to the bank, which satisfies the existing credit obligation. The bank does not initiate enforcement proceedings.
In the event that the borrower was not married and had no children, the bank will seek to recover the obligation. The way to do this, for example, is to sell the apartment of the deceased borrower or all his material goods.
Creditworthiness of the new debtor
There may also be a situation in which, after the death of a single (sole borrower), heirs assume his obligations and continue repaying the loan. The mere death of the borrower does not require the annexing of the loan agreement, and the transfer of obligations is by law, on the basis of general succession.
Acceptance of the inheritance can take place “directly” (the heir is responsible for the repayment of the loan taken by the deceased with all his property) or “with the benefit of inventory” (he is responsible for the repayment of the loan with his property but up to the so-called value of the inheritance).
The family may also waive the right to inheritance and debts of the deceased. In this case, special declarations should be made to the notary or court, within six months of the borrower’s death. The cost of such documents is PLN 50, and the non-settlement of cases is associated with the unequivocal, voluntary takeover of the estate (as well as the loan).
To sum up – taking care of your own and, above all, your loved ones’ interests, it is worth getting interested in the offer of using insurance packages offered by credit products.