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AI’m trying to understand how debts are handled after someone passes away in India. Suppose a person has accumulated significant debts such as credit card dues, personal loans or trading losses and then dies. What becomes of these debts?
1•Are the family members legally obligated to repay them?
2•Can creditors pursue the deceased person’s parents, siblings, or children for repayment?
3•Does the presence or absence of a will affect this situation?
4•What if the deceased had no assets or estate?
I’m interested in knowing the legal procedures and responsibilities involved. Any insights or experiences shared would be appreciated.
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ILawyer here. This is a quick summary. Hope it helps. 1. If loan is secured, then it is recovered by banks by liquidating the secured assets. 2. If unsecured, then by liquidating the self acquired properties of the borrower. 3. If any family member (non-minor) signed as a guarantor, then they are liable for repayment as much as the borrower. 4. Ancestral property share of the borrower can be utilised by banks.
This is a very general and basic understanding. Individual cases might lead to different responses basis the facts. Speak with a local lawyer before acting on this response.-
AWhat if the person who passed away was a government employee and had a joint account with their spouse?
From what I understand:
1) If it’s an “either or survivor” account, the spouse becomes the sole owner, but can creditors still target that account?
2)Also, are pension and gratuity protected from debt recovery?
3)What happens if only the deceased contributed to the joint account can that be legally claimed by lenders?
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ASupreme Court advocate here:
First of all, I will put a *bona fide* disclaimer here stating that suicide is not an option. Stay safe.
I’ll answer these questions in seratim:
1. The family is not legally obligated to repay them out of their own pocket. But if said member receives any money from the estate of the deceased, the creditor can seek repayment through said estate. For eg. A owes X a sum of 15 lakhs, and passes away. B, the son of A, receives 5 lakhs from the estate of A. X can now legally seek repayment of 5 lakhs from B on account of the 5 lakhs he inherited from A, but not of the remaining 10 lakhs.
2. No. They can surely file a case, but the case will not go anywhere. Notwithstanding, harassing the kin of the debtor is a common tactic that is used by unscrupulous bankers (which is also illegal).
3. Not really. Borrowing from the earlier example, if A leaves a will for B and leaves all his money to B via the will, the testator is obligated to pay off A’s debts to X first and then disburse the remaining assets.
4. In this case, the heirs are not liable to pay anything.The golden rule that needs to be followed here is straightforward: a creditor is liable to take money solely from the debtor and from the debtor’s estate. If the debtor dies, the creditor may take money from the legal heirs to the extent where repayment of said debt is sought only from the estate that the heirs may have inherited and not from the heirs’ own assets/estate.
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**Disclaimer: The information provided above does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available are strictly for general informational purposes only and create no liability on the provider of said information. Readers should contact their attorney to obtain advice with respect to any particular legal matter.**
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AWhat if the person who passed away was a government employee and had a joint account with their spouse?
From what I understand:
1) If it’s an “either or survivor” account, the spouse becomes the sole owner, but can creditors still target that account?
2)Also, are pension and gratuity protected from debt recovery?
3)What happens if only the deceased contributed to the joint account can that be legally claimed by lenders?
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S1. Any uncollateralized debt like credit cards, PLs, etc are wiped out. No bank or finance company can demand the family pay it.
2. Any collateralized loan like jewel loan or home loan can be handled two ways: the nominee or the legal heir can repay the loan and get the assets or let the bank/FI sell and close., Either way, the family is not responsible if there is a shortfall.
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