Under what conditions does the bank have the right to recover money from the heirs of the borrower? Let us figure out the answers to these questions.
New Delhi: Many families who have lost their primary breadwinners are worried about what will happen to any outstanding loans or credit card balances. The last thing on their minds would be to interact with collection agents. The biggest thing is whether it is necessary to pay all types of loans. The actions that financial institutions will take to recover unpaid debts depend on the type of loan. Lenders are supported in their efforts to recover by laws in specific situations, such as a home loan.
Read More: SBI is offering personal loans in just 4 clicks for THESE customers; Check details
Under what conditions does the bank have the right to recover money from the heirs of the borrower? Let us figure out the answers to these questions.
Home loan
If a person takes out a shared home loan and the primary applicant passes away, the other co-applicant will be solely responsible for repaying the loan. The bank has the right to use the debt recovery procedures provided by the SARFAESI Act, the Debt Recovery Tribunal, or the Civil Court if the other applicant is likewise unable to repay the loan.
By seizing control of the asset and selling it, the bank can recoup its debt. Banks, however, offer the family members a few days to secure the funds necessary to repay the loan.
Read More: Elon Musk plans to increase the number of Twitter layoffs in sales division
Auto loan
The family of the borrower is responsible for repaying the loan in the event of the borrower’s death. The bank seizes the car and sells it at auction to recoup its loan if the family is unable to repay the loan.
Personal loan/ Credit card
If someone dies without paying the personal loan or credit card bill, the bank cannot recover the loan from his family or legal heirs. The property is also not confiscated in these cases. These loan accounts are considered NPA.
