What happens to the deceased’s credit debt?
There are many people who have lost their lives without pulling out a loan. What happens in such a situation is also wondered by most people.
The importance of life insurance as a protective factor emerges here
With life insurance in almost every loan amount, in fact, not only the life of the person taking out the loan but also the debts are insured. In the case of life insurance, the remaining credit debts of the deceased are paid by the insurance company. In this case, insurance costs, which are considered as extra charges when you take out a loan, are very important.
Insurance is not the same for everyone. Many factors, including the person’s age, determine the insurance premium fee.
What if the person doesn’t have life insurance? If the borrower does not have insurance, the debt is paid by the heirs of the person.
In the case of Life Insurance
While life insurance is not compulsory for the person when receiving credit, banks prefer to have it built. Life insurance can be provided without housing, need or vehicle loan. This is the right choice for creditors. Because if the debtor dies, all debts are paid by the insurance.
In some exceptional cases, the insurance company does not pay the debt even if the person has life insurance.
These situations include:
• If the debtor is suspected of suicide in his death, the insurance may refuse to pay. In such a case, an autopsy is required.
• If the borrower using the loan has an existing illness but has not stated it in the policy, the insurance company may not pay if the person determines that the person has the disease at the time of his death.
If the person with life insurance dies, can the loan debt be recovered?
Having life insurance means that the person’s entire loan debt will be paid. In such a case, the amount of the loan paid by the person who has paid a portion of the loan debt and then passed away is returned to the heirs.
However, they may refuse to pay some or all of the loan amount to the heirs due to the additional clauses in the insurance companies’ contracts. If this happens, you can get help from a lawyer to review and guide the contract.
In order to receive the payment, the deceased borrower’s death certificate together with the persons who are in succession must apply to the bank. If the insurance does not pay in this case, you can legally claim your rights.
In the absence of life insurance
In the event that a person who withdraws a loan and dies without paying all the debts does not have life insurance, his debts must be paid by his heirs. Because the distribution of inheritance applies to debts. However, heirs can renounce both the inheritance and the debts of the deceased by making a rejection. In this case, legal liability is eliminated.
If the borrower has vouched for the loan and the debt has passed away before the settlement, the debt is collected from the guarantor.