Credit card dues after life.

[FinoGuy]

What will happen to the dues after one dies?
For example, person A died unexpectedly before his statement generation date of 'X card '. Nobody in his family knew he held X card.
The statement gets generated as per time but never gets cleared.
What will happen to the dues(let's say 1lakh) now? Will the cc issuer bank keep charging exorbitant interest(let's say 42%pa+penalty) on dues +interest and one day show up at home and trouble the family to clear the bill? Since CC issuer doesn't take any collateral & is unsecured, it got me into thinking..

 

[FinoGuy]

Need your inputs on this who is expert in this field. Tagging a few CC enthusiasts .
@Subhankar @TechnoFino @Bigde @S S V @bhavyegoel @vaibhav111.

 

[FinoGuy]

Feel free to tag if you know any banker in this forum guys.

 

[FinoGuy]

@D₹V @Strange @#aniket @imdjay @SmartSave @Tejo @RAMESH BABU N @BestBanker.

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Please try to keep this thread clean and to the point guys. Will be helpful for referring in future if anyone wants to

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Also share any stories related to the topic if any,

 

[SSV]

Need your inputs on this who is expert in this field. Tagging a few CC enthusiasts .
@Subhankar @TechnoFino @Bigde @S S V @bhavyegoel @vaibhav111.

Look at this,, this will throw some light…

What Happens if Credit Card Holder Dies in India

How to Manage Credit Card Debt When Cardholder Dies - Check a List of Points to Manage Credit Card Debts Left Behind by a Deceased Loved One.

www.bankbazaar.com

For quick reference/

 

[Strange]

What will happen to the dues after one dies?
For example, person A died unexpectedly before his statement generation date of 'X card '. Nobody in his family knew he held X card.
The statement gets generated as per time but never gets cleared.
What will happen to the dues(let's say 1lakh) now? Will the cc issuer bank keep charging exorbitant interest(let's say 42%pa+penalty) on dues +interest and one day show up at home and trouble the family to clear the bill? Since CC issuer doesn't take any collateral & is unsecured, it got me into thinking..

According to Indian law, the spouse or the family members of the deceased person are not liable to pay the credit card debt, unless they were joint account holders or co-signers on the card. The credit card debt is considered an unsecured debt, which means it is not backed by any collateral or asset. When a person dies, their credit card debt becomes part of their estate, which is the total value of their assets and liabilities. The legal heir, who inherits the estate, is responsible for paying the credit card debt from the available assets, such as cash, bank accounts, investments, property, etc. The credit card debt has a lower priority than other types of debt, such as taxes, mortgages, or loans. This means that if the estate does not have enough assets to cover all the debts, the credit card debt may not be paid in full or at all.

The credit card companies cannot go after the family members or heirs of the deceased person for the unpaid debt, unless they were joint account holders or co-signers on the card. They have to file a civil suit for recovery and wait for the estate to be settled. The credit card companies will stop charging interest and fees on the account and provide a grace period for the payment, once they receive a copy of the death certificate. However, some credit card companies may try to persuade the family members or heirs to pay the debt voluntarily, by appealing to their sense of moral duty or guilt. This is not a legal requirement, and the family members or heirs can refuse to pay the debt without any consequences.

To summarize, credit card debt does not disappear when a person dies, but it may not be paid in full or at all, depending on the situation of the estate and the credit card terms and conditions. The family members or heirs of the deceased person are not responsible for the debt, unless they were joint account holders or co-signers on the card. They should notify the credit card companies of the death as soon as possible and provide a copy of the death certificate. They should also check the credit reports of the deceased person and themselves to make sure the credit card accounts are closed and the debt is reported correctly.

Source:
(1) What Happens If Credit Card Holder Dies In India? | IIFL Finance. https://www.iifl.com/blogs/personal-loan/what-happens-if-credit-card-holder-dies-in-india.
(2) Who Pays The Credit Card Debt In India After Death Of Cardholder?. https://www.goodreturns.in/classroo...debt-india-after-death-cardholder-440704.html.
(3) What Happens if Credit Card Holder Dies in India - NoBroker. https://www.nobroker.in/forum/what-happens-if-credit-card-holder-dies-in-india/.
(4) Steps to Take When a Cardholder Dies - Wint Wealth. https://www.wintwealth.com/blog/steps-to-take-when-a-cardholder-dies/.
(5) Debt of a dead credit card holder - Indian Kaanoon. https://www.kaanoon.com/284879/debt-of-a-dead-credit-card-holder.

 

[Tejo]

What will happen to the dues after one dies?
For example, person A died unexpectedly before his statement generation date of 'X card '. Nobody in his family knew he held X card.
The statement gets generated as per time but never gets cleared.
What will happen to the dues(let's say 1lakh) now? Will the cc issuer bank keep charging exorbitant interest(let's say 42%pa+penalty) on dues +interest and one day show up at home and trouble the family to clear the bill? Since CC issuer doesn't take any collateral & is unsecured, it got me into thinking..

The family need to inform the bank and submit the death certificate.

The bank people will ask to pay off, eventually the family members no need to pay single rupee.

If person dies and family deny to pay off the dues then the agents will close that as npa died by submitting death certificate. All most every credit card will be insured and the bank's will get some amount.

If any balance exist on the card holder account then the bank will loot whole the amount upto to the dues.

 

[Tejo]

The family need to inform the bank and submit the death certificate.

The bank people will ask to pay off, eventually the family members no need to pay single rupee.

If person dies and family deny to pay off the dues then the agents will close that as npa died by submitting death certificate. All most every credit card will be insured and the bank's will get some amount.

If any balance exist on the card holder account then the bank will loot whole the amount upto to the dues.

Also the credit cards are unsecured loans, banks can not or will not file any civil case etc to recover money from the property of that card holder.

As I said the every credit card is insured, just how we have insurance.

 

[abhiver]

Usually if you have the autopayment enabled, then due will get settled automatically.

Else, bank can freeze the card holder saving account and recover from them, but only to the general outstanding, not the late fees and charges. I am not sure about this.

 

[FinoGuy]

According to Indian law, the spouse or the family members of the deceased person are not liable to pay the credit card debt, unless they were joint account holders or co-signers on the card. The credit card debt is considered an unsecured debt, which means it is not backed by any collateral or asset. When a person dies, their credit card debt becomes part of their estate, which is the total value of their assets and liabilities. The legal heir, who inherits the estate, is responsible for paying the credit card debt from the available assets, such as cash, bank accounts, investments, property, etc. The credit card debt has a lower priority than other types of debt, such as taxes, mortgages, or loans. This means that if the estate does not have enough assets to cover all the debts, the credit card debt may not be paid in full or at all.

The credit card companies cannot go after the family members or heirs of the deceased person for the unpaid debt, unless they were joint account holders or co-signers on the card. They have to file a civil suit for recovery and wait for the estate to be settled. The credit card companies will stop charging interest and fees on the account and provide a grace period for the payment, once they receive a copy of the death certificate. However, some credit card companies may try to persuade the family members or heirs to pay the debt voluntarily, by appealing to their sense of moral duty or guilt. This is not a legal requirement, and the family members or heirs can refuse to pay the debt without any consequences.

To summarize, credit card debt does not disappear when a person dies, but it may not be paid in full or at all, depending on the situation of the estate and the credit card terms and conditions. The family members or heirs of the deceased person are not responsible for the debt, unless they were joint account holders or co-signers on the card. They should notify the credit card companies of the death as soon as possible and provide a copy of the death certificate. They should also check the credit reports of the deceased person and themselves to make sure the credit card accounts are closed and the debt is reported correctly.

Source:
(1) What Happens If Credit Card Holder Dies In India? | IIFL Finance. https://www.iifl.com/blogs/personal-loan/what-happens-if-credit-card-holder-dies-in-india.
(2) Who Pays The Credit Card Debt In India After Death Of Cardholder?. https://www.goodreturns.in/classroo...debt-india-after-death-cardholder-440704.html.
(3) What Happens if Credit Card Holder Dies in India - NoBroker. https://www.nobroker.in/forum/what-happens-if-credit-card-holder-dies-in-india/.
(4) Steps to Take When a Cardholder Dies - Wint Wealth. https://www.wintwealth.com/blog/steps-to-take-when-a-cardholder-dies/.
(5) Debt of a dead credit card holder - Indian Kaanoon. https://www.kaanoon.com/284879/debt-of-a-dead-credit-card-holder.

Well written.. Ai se toh nhi nikala na?

 

[#aniket]

@D₹V @Strange @#aniket @imdjay @SmartSave @Tejo @RAMESH BABU N @BestBanker.

---

Please try to keep this thread clean and to the point guys. Will be helpful for referring in future if anyone wants to

---

Also share any stories related to the topic if any,

As per Indian Contract Act, 1872, death of one of the contracting party can be termed as Supervening Impossibility resulting in discharge of performance by the operation of law(Force Majure) in the case personal nature contract.

If it's not, the contact is valid and binding still, however the obligation to carry out the promise lies upon the legal representative/heir only if the contract is not of personal nature (means requirement of personal skill or knowledge which can be fulfilled in the best way from that deceased person only like in case of artist).

There's no personal liability of heir(s) be it Secured Loan or Unsecured if the heir is not joint promisor as in the case of Credit Card raised by you (though there's no collateral in the first place to forfeit upon non compliance; defaults), means he/she/they is/are supposed to pay out of the estate of deceased person only, which might have got inherited by the deceased heirs.

Lastly, the deceased person account is classified as a non-performing asset (NPA) after non payment for 90 days.

This is general law, I am not aware about special laws to govern this, if any. Need to research about it. Let me know if anyone is aware about it.

By the way, good question, @FinoGuy bro.

 

[#aniket]

According to Indian law, the spouse or the family members of the deceased person are not liable to pay the credit card debt, unless they were joint account holders or co-signers on the card. The credit card debt is considered an unsecured debt, which means it is not backed by any collateral or asset. When a person dies, their credit card debt becomes part of their estate, which is the total value of their assets and liabilities. The legal heir, who inherits the estate, is responsible for paying the credit card debt from the available assets, such as cash, bank accounts, investments, property, etc. The credit card debt has a lower priority than other types of debt, such as taxes, mortgages, or loans. This means that if the estate does not have enough assets to cover all the debts, the credit card debt may not be paid in full or at all.

The credit card companies cannot go after the family members or heirs of the deceased person for the unpaid debt, unless they were joint account holders or co-signers on the card. They have to file a civil suit for recovery and wait for the estate to be settled. The credit card companies will stop charging interest and fees on the account and provide a grace period for the payment, once they receive a copy of the death certificate. However, some credit card companies may try to persuade the family members or heirs to pay the debt voluntarily, by appealing to their sense of moral duty or guilt. This is not a legal requirement, and the family members or heirs can refuse to pay the debt without any consequences.

To summarize, credit card debt does not disappear when a person dies, but it may not be paid in full or at all, depending on the situation of the estate and the credit card terms and conditions. The family members or heirs of the deceased person are not responsible for the debt, unless they were joint account holders or co-signers on the card. They should notify the credit card companies of the death as soon as possible and provide a copy of the death certificate. They should also check the credit reports of the deceased person and themselves to make sure the credit card accounts are closed and the debt is reported correctly.

Source:
(1) What Happens If Credit Card Holder Dies In India? | IIFL Finance. https://www.iifl.com/blogs/personal-loan/what-happens-if-credit-card-holder-dies-in-india.
(2) Who Pays The Credit Card Debt In India After Death Of Cardholder?. https://www.goodreturns.in/classroo...debt-india-after-death-cardholder-440704.html.
(3) What Happens if Credit Card Holder Dies in India - NoBroker. https://www.nobroker.in/forum/what-happens-if-credit-card-holder-dies-in-india/.
(4) Steps to Take When a Cardholder Dies - Wint Wealth. https://www.wintwealth.com/blog/steps-to-take-when-a-cardholder-dies/.
(5) Debt of a dead credit card holder - Indian Kaanoon. https://www.kaanoon.com/284879/debt-of-a-dead-credit-card-holder.

Already the ans was given before, so I have wasted typing the similar thing again.

Well written.. Ai se toh nhi nikala na?

Mein bekar mein time waste kar liya type karke.

Good night

 

[AlgoTrader]

So it seems to be better to keep someone informed

 

[psmangat5]

Though legally heirs have to pay the debt upto the extent of assests inherited by them, like the debt is 10 lakh, they got assets of 4 lakh from deceased, they will have to pay 4 lakh. But I don't think Credit Card companies will be chasing the clients for smaller amounts, yes they may sell your accounts to ARCs if it is substantial amount which in turn chase you.

 

[JimCarrey]

The whole problem in this scenario is:
Nobody in his family knew he held X card.

Now for a well planned person, one would probably leave a document of all liabilities, but otherwise it’s not easy for others to know and clear all dues. Maybe after few months when collection guys calls then only these things ring bells and cause alarms.

 

[SmartSave]

TL;DR: Legal heirs don't need to pay. Let courts handle.

Every individual is a legal entity having their own rights. This includes Spouse, Every child (after 18), Parents, Brother/Sister, etc. and even a private limited/LLP is a separate legal entity (more on this later).

Unless the legal heirs/entity are co-signers or have any sorta agreement signed wherein liabilities repayment was undertaken, they're technically not liable to settle ANY dues, forget after death even when the borrower is alive, banks or anyone for that matter cannot go after the legal heirs/entity demanding any liabilities to be paid if the borrower defaults to pay.

All these banks or recovery agents may try tactics to try and extract funds through guilt/moral/pressure but legally they can't and there are proper channels if they wish to actually try and recover which would take years in courts for it to be worthy (comes with no guarantee it'll yield any results either -- which is why recovery tactics are used before legal, because whatever can be recovered in this phase is the only way out for them). Unsecured loans of any kind (whether taken via banks as personal loan / credit card / any individual / market) are not backed by any collateral and are risky loans and the lender has given with an understanding of such that they may lose it all and there won't be any means to recover (unless there was some insurance attached).

Now remember what I said about legal entity having their rights? Many scammers including like the well known Mall ya exploit these laws to their advantage. Borrow money, buy properties, transfer them into children's name or spouse if they trust them. Because these are a separate legal entities of their own, banks have a hard time to recover anything. Because when you go after the borrower, the borrower itself is bankrupt (legally), has no assets to his name, bank balance zero, everything in someone else's name, legally this borrower has nothing to repay. Lenders can file suits, but we all know how courts function. It can go on for decades and such loans will anyway end up as NPA, if there were any secured loans, the collateral will be taken over (after legal proceedings) but anything else have to be written-off and fought in court with no ends. Now if banks (or any lender) try to go after legal heirs/entity demanding to repay the debt of the borrower, those can all be challenged in courts because on what basis is the lender trying to demand? it holds no grounds when all these other entities aren't the borrowers or co-signers, they are not liable.

Banks legally cannot go after any other legal entities not even after companies where the borrower is the share holder unless it's a local firm which comes with unlimited liabilities. Pvt Ltd/LLP function as a separate legal entity and have their own set of laws/assets/liabilities. So unless that company was also legally part of the contract to repay, no one can go after its assets. The scope gets limited to the share holding and again scammers structure it such that, it is once again limited to yield nothing at the end. There are many things to this but if we go in depth, this will become lengthier, just sharing an extract and an overview of how things work and malicious people exploit these for their benefit while general people with no knowledge give in to the recovery tactics instead of challenging in courts.

That was while the person is still alive, so you can imagine what happens when they die. One should exercise their legal rights and let legal course take action. Hence, legal heirs should challenge if banks come after them.

P.S. This concept of legal entity having their own rights is often seen exploited by SC/ST folks too (not everyone but if we dig in the court cases, we'll see many civil suits around them -- some can be genuine too), even after selling the property to anyone, one or the others from the family show up filing suits demanding their share because they had their rights on it and they do it even when the property was sold before the kid was 18, once he becomes legal, he too stakes a claim in a property sold by his grand father...lol. Which is why in real estate, one is told to avoid such properties, they're milked forever thanks to the exploitation of laws (courts itself may not pass judgement in their favor but when the property is in litigation and a case runs for years, you end up not being able to sell or utilize it, hence, out of court settlements happen and that is what they're after...end goal was to extract money from you anyway....lmao). While these laws were designed to protect the rights of the citizens, they often get exploited by malicious people in every side. This may look irrelevant to the topic but I've shared this to make you understand the concept of legal entity and their rights better.

 

[Sudip]

a member from extended family passed away, he had IndusInd legend credit card which was used during his hospitalization.

Due date is Aug 4.

Indusind RM stated there is no such concept of credit card dues being waived off, we can try emailing customer care however we're not receiving any response.

is there a chance of dues being waived off should we pay the bill amount to not incur hefty interest?

thanks.