What is debt inheritance?
First, we should start by defining what debt inheritance is to the deceased. In principle, the obligation to settle debts along with the acquired property rights is assumed. There are cases in which the value of these liabilities is higher than the capital received.
According to legal provisions, there are two types of heirs:
- The statutory heir, who is appointed in the event that the testator did not make a will, or at a time when persons having the right to inheritance do not want to accept him and there is a need to appoint another person.
- A testamentary heir is a person who is inherited as a natural or legal person. Interestingly, a conceived child can also be a testamentary heir.
The borrower’s death does not mean the cancellation of any credit or loan. If the heirs do not seek to settle the debt, the bank or loan company may take steps to recover the debt.
In such a situation, the creditor may demand repayment of the entire debt, including interest, even if the heir did not have knowledge of loans or non-bank loans. Most importantly – he is responsible for all debts incurred as a result of liabilities incurred.
How to check if the deceased person took a loan?
First of all, it is worth knowing what the deceased person’s debt may consist of. It consists mainly of unpaid loans and payday loans, unpaid loans at the bank, unregulated rent for renting a flat or a flat.
In addition, the debt may include unpaid insurance premiums, energy or water bills, fines, product installments or car leasing installments. For entrepreneurs, this list is expanded by unpaid invoices.
Finding information about a deceased person’s debt is often very easy. All you need to do is look for bank statements, overdue invoices or payment requests at your home. If we are unable to find this information, we must go to the appropriate institution to obtain information.
These are financial registers in which debtors’ data are collected, such as the Credit Information Bureau (BIK) or the Economic Information Bureau database (BIG, Infomonitor or KRD). Checking information from these institutions can be problematic for a third party as long as the potential testator is alive.
The case looks simpler if you decide to accept the inheritance. Then the registers will provide information without any problem as long as we attach the death certificate and the certificate of acceptance of the inheritance.
Checking the debtor’s debts and legal regulations
The situation is different when it comes to people who have not yet decided on the inheritance. In the event that proceedings are pending regarding its acquisition, the registers may give a negative decision regarding information on the debtor’s debts.
If the registers do not want to provide information on the testator’s obligations, ask the court for an inventory. If the court accepts this request, it will appoint a court bailiff who will review the composition of the deceased’s estate. Then he will investigate to which institutions the deceased had obligations.
It is worth remembering that debts are not only liabilities that are in financial registers and are owed to institutions such as shops, companies or banks. Debts can also be obligations to private individuals who have been recorded in documents or notes.
Most often they relate to small amounts borrowed in person or items of above average value, e.g. laptops or watches.
Who inherits debts after the borrower’s death?
According to legal provisions, at the time of death the deceased person’s property is inherited. The value of assets is influenced by assets accumulated during life, such as money or real estate, and liabilities, which are usually financial liabilities.
The estate is inherited by the heir if the deceased has left a will. Then the inheritance is divided according to its provisions. If the inheritance has not been carried out, the estate is inherited by the heirs in the order: the spouse and children of the deceased, hereinafter parents, siblings and distant relatives.
Within six months of obtaining information about the testator’s death, the inheritance may be accepted, together with all financial liabilities that have been inherited, or taken with the benefit of an inventory, which involves liability for financial liabilities, only up to the amount of assets recorded in the inheritance inventory, unless the assets and liabilities in the inventory have been intentionally omitted.
You can also decline the drop. The application must be filed with the court or notary. Failure to submit the application is tantamount to accepting the inheritance with the benefit of inventory.
What are the consequences of not paying back inherited debts?
If we decide to accept the decline along with the debts and we will not be able to cover the obligations, the normal debt collection procedure will start. First, of course, we will receive payment requests, then we may be reminded.
Information on this subject is contained in the content of civil law agreements, which include loan agreements. The same conditions and fees are left as if the testator was still alive.
How to avoid paying back the loan for the testator?
The easiest way is simply not to accept the inheritance within 6 months of information about the possibility of inheriting the inheritance. At the same time, it is worth remembering that the law works in favor of the heir and protects him from paying off debts in an amount greater than he inherited, so he can take advantage of inheritance with the benefit of inventory.
Loan insurance against the borrower’s death
You can insure the loan against the borrower’s death. There are situations where the deceased had such insurance, and therefore, for example, there is no need to repay the entire debt. It all depends on the provisions contained in the General Terms and Conditions of Insurance (GTC).
This is the document that sets out the most important assumptions of the insurance contract. If we know that our loved one had a death loan insurance, then before deciding whether to accept or not accept the inheritance, it is worth to read the General Terms and Conditions of Insurance and the agreement between the testator and the insurer.