Debt of a Deceased Person? | Value Research If the debt taken by a person who has died is a secured loan, the lender can take over the collateral
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Debt of a Deceased Person?

If the debt taken by a person who has died is a secured loan, the lender can take over the collateral

What happens to the debt of a person when he dies? More specifically, loans like education loan and housing loan, when the deceased is not insured.
- Anand

Loans are of two kinds: secured and unsecured. Personal loan, credit card outstanding, etc are unsecured. If the person is dead, the lender has no option but to write it off. However, where there is a collateral against a loan (such as a housing loan), the lender can claim the collateral if there is a default after the person dies. That is why it is necessary to have an adequate term insurance cover to take care of all the financial liabilities.


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