May 25, 2024

What Happens to the Deceased Person’s Loan Debt?

The most curious question of people who have lost a relative from their family is what is the credit debt of the deceased person?

While we are alive, we need financial support at some moments in life and we usually get this support from banks. Of course, banks give us loans within certain interest rates. So, if the borrower dies, what will be the debt of the loan he took? In this article, we will answer the question of what is the credit debt of the deceased person.

What Happens to the Deceased Person’s Loan Debt?

If a person used a loan from a bank or financial institution while he was alive and later died, at this point all the responsibility and responsibility falls on the close family members.

If the first-degree relatives of the deceased, such as his wife, son, daughter, brother, do not know that he owes a loan to any bank, they should go to the banks after the burial procedures are completed and check whether the deceased person has credit debt.

If a person has taken out life insurance for the loan he used from the bank, there is nothing to worry about. Because this life insurance means that a kind of loan debt is closed.

Until 1999, people who took out loans could or did not take out life insurance voluntarily. However, with a law enacted in July 1999, it has become mandatory by law to have life insurance for the borrower. Depending on the amount of the loan you take, the premium amount of life insurance also varies.

If the loan has a life insurance policy, the bank collects the unpaid portion of the loan from the insurance company and pays the loan amounts paid until that day to the family of the deceased.

Because, since the bank collects the entire loan amount from the insurance company, the laws impose a requirement to pay the total amount of installments paid to the family.

Thanks to the life insurance of the deceased person’s loan debt, it is completely closed and there is no debt to the family.

Life insurance is one of the most important things to consider when using a loan. Be sure to sign a life insurance contract in addition to the loan usage agreement signed while taking out a loan.

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