No payday loan insurance and death of the borrower

 

 

 

 

Currently, many banks and payday loan companies offer loans along with insurance. Not infrequently for insurance is also a condition for receiving money. Insurance policies offered with payday loans are usually life policies whose purpose is to protect the borrower in the event of problems with repayment of the loan . They concern the situation of job loss, illness that prevents repayment of installments, and death. But what if the borrower’s death occurred and the loan was not insured?

Loans and payday loans do not expire automatically upon the death of the borrower. This applies to both short cash loans in banks, non-bank payday loans, as well as mortgage loans for purchase of a flat or construction of a house. Of course, a greater danger occurs when an installment loan or a mortgage loan has been drawn for a very high sum and for a long period.

When a loan or payday loan was insured in the event of the client’s death, then the satisfaction is covered by the policy. But what happens when the insurance has not been signed?

Uninsured loan for consumption – who has to pay it back?

Let’s focus here on cash loans usually made for various types of shopping. If a cash loan is taken for consumption purposes, which is usually not secured, then upon the death of the borrower the obligation to repay falls on the heirs. The lending institution then terminates the contract and the consequence is that the institution satisfies the assets left by the borrower.

If the borrower took out a loan as a spouse, then the gratification takes place on the joint property, but this is only when the deceased debtor has taken the loan with the consent of his spouse. In the opposite situation, the debt passes on relatives who can accept or reject such a decline.

Loan in the fall

It is worth to point out the issues related to accepting the inheritance. At the moment of the borrower’s death, an inheritance is opened on the basis of a will written by him or on the basis of currently applicable legal regulations, on the basis of statutory inheritance. The heir may both accept and reject the inheritance.

In the case of rejection of the inheritance completely, the heir is not responsible in general for inheritance debts. Of course, he does not inherit both debts and other elements of inheritance, for example home, car, money. The heir may also take a direct fall, i.e. without any limitation of liability – he is then obliged to pay off his debts with his property. The third option is to accept the inheritance with limited liability, i.e. with the benefit of the inventory. This limits the liability of the heirs for debts to the value of the inheritance received.

Therefore, in the worst case, the heir will not gain anything, because the inherited property will go into debt repayment, and in the best case it will gain if the estate is still in possession of the inherited debt.

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