What is the next process if the borrower dies? Here the article
Loan Recovery: What if a person dies while the loan is pending? Here we will know what happens if a person dies after taking a loan. In such a situation, from whom will the bank recover the loan? According to the rules, if a person dies after taking a loan, the bank will first contact the co-applicant of that loan account. If there is no co-applicant for the loan or the co-applicant is unable to repay the loan, then the bank approaches the guarantor for the loan.
If the guarantor also refuses to repay the loan, the bank then approaches the legal heirs of the deceased and appeals to them to repay the loan arrears on time. If none of the co-applicants, guarantors, and legal heirs can repay the loan, banks resort to the last resort of forced recovery. Banks have the option of taking possession of the deceased’s property as a last resort to recover the loan.
When the co-applicants, guarantors, and legal heirs of the loan account show an inability to repay the loan, in such cases, the banks have the right to recover the loan by selling the assets of the deceased. In the case of home loans and auto loans, banks directly take possession of the deceased’s house or vehicle and then conduct an auction and sell it to recover the loan. If a person has taken a personal loan or any other loan, then in such cases, banks recover their money by auctioning any of their other assets.
