The borrower’s death does not mean that the debt also dies with it – quite the opposite. This applies to all types of liabilities – loans in parabanks, the so-called payday loans, property loans as well as mortgages taken to buy real estate. The higher the loan amount, the greater the future interest on its repayment.
Many banks and loan companies offer their insurance – in the event of death, illness preventing repayment of the loan, as well as in the event of the borrower losing his job. In such situations, policy money is allocated to cover the commitment. In the following article we will also present what happens to the loan in the absence of insurance.
Loan and death of the borrower
We inherit not only wealth but also debts from the deceased. With the acquisition of property rights, we also assume the obligations incurred by the deceased, including loans, bank loans, online non-bank loans and all kinds of other debts. Sometimes it may happen that the liabilities exceed the assets. The current inheritance law provides for two types of heirs:
- Statutory heirs – such heirs are appointed in the absence of the testator’s will. It is also appointed when testamentary heirs do not want to accept an inheritance.
- Testament heirs – they may be a natural person or a legal person appointed to inheritance in a drawn up will.
Liability for debts
The death of the debtor on account of the testator’s loan or credit does not mean the cancellation of debts. In the event that the heirs do not take steps to settle the liability, the bank or other lending institution may take steps to settle the claim.
The rule is that the heir is responsible for the testator’s debts with all his or her property. The demand to pay the entire amount of debt is independent of the knowledge or lack of knowledge of the heir about the debts incurred.
Inheritance of debts with the benefit of inventory
In 2015, regulations came into force that significantly improved the situation of heirs, in particular those unaware of the existence of debts. Currently, in the absence of a declaration by the heir about accepting or rejecting the inheritance, he inherits with the benefit of inventory. This means that the heir is liable for the debtor’s debts only up to the value of the assets inherited.
For example, if an heir receives a car with a value of PLN 200,000 and a mortgage with a PLN 300,000 remaining to repay, he is responsible for the debt only up to PLN 200,000. However, it should be remembered that this situation only occurs in the case of inheritance with the benefit of inventory. Its opposite is simple inheritance. If the subject of the inheritance is only debts, heirs with the benefit of inventory are not obliged to repay them.
What if I do not pay my inherited debts?
Lack of coverage of the obligation inherited by the heir (e.g. credit, online non-bank loan, online loan), the debt collection procedure will be launched. The creditor will send the payer heir reminders and reminders regarding the fulfillment of the obligation. In this situation, it is worth communicating with the creditor – it is possible that we will then obtain an extended debt repayment period, spread it out in installments or cancel interest.
In the absence of an agreement between the creditor and the debtor – heir, the case will go to court. After ascertaining the existence of the claim, its subject and parties, the court will issue an enforcement order, on the basis of which the bailiff will start the enforcement proceedings. Its purpose is to pay the creditor and fulfill the obligation incurred by the deceased.
The heir, in the case of simple inheritance, is liable for debts with all his property. As a result, the bailiff can take over all movable and immovable property owned by the heir who inherited the deceased’s debt. Debtor’s items that are necessary for a proper life – e.g. food, clothing – remain free from enforcement. The bailiff is also not entitled to seize any items necessary for learning or practicing faith.
Can you relinquish your inheritance?
Yes of course. However, the concepts of renunciation of inheritance and rejection of inheritance should be separated.
The first of these terms means the renunciation of inheritance while the testator is still alive. It has the form of an agreement between the testator and the heir, which we sign with the notary public. A person who has renounced inheritance is treated as if he had not survived the opening of the inheritance.
After the testator’s death, the only option is to decline the inheritance. The time for the decision to accept or reject an inheritance is six months from the day on which the heir learned about the basis of the appointment. This means that the 6-month deadline is not always counted from the time of death. If we want to reject the bleed, we must make a statement to the district court or notary. A declaration of acceptance or rejection of an inheritance is irrevocable, unless it was made due to an error (e.g. we were not aware of the existence of debts) or a threat.
Polish law provides for the payment of an inheritance tax. Members of the immediate family of the deceased are exempt from this obligation. It includes a spouse, parent, stepmother / stepfather, child, stepson and siblings. In order not to pay tax, inheritance should be reported to the Tax Office.
The tax due will vary depending on which tax group the heir will be in. The tax-free amount is also not taxable.
- Group I – all from the tax-free group, in-laws, son-in-law and daughter-in-law. The tax-free amount is currently PLN 9,637.
- Group II – tax-free, distant loved ones – nephew, nephew, uncle, aunt, descendants and stepchildren, spouses, siblings, siblings of spouses, spouses of siblings of spouses and spouses of other descendants. The tax-free amount is PLN 7,276.
- Group III – all other persons. The tax-free amount is PLN 4,902.
Who can get a loan?
The first security for future heirs is to prevent people over 75 from taking a loan. This is, of course, non-binding collateral, but used by most banks and loan companies. Some lenders lower this age, while others increase it.
The granting of the loan is not affected by the patient’s medical condition. No bank or loan company requires you to submit current medical examinations confirming good health. Our financial standing, assets and income presented depends primarily on whether we get a bank, non-bank loan, online loan or payday loan.
Is it worth insuring yourself when taking out a loan?
Internet loans, free loans, online installments and other loans – we hear about them at every step, on the radio, television and the Internet. Lenders encourage us to insure our obligations, sometimes even insurance is compulsory. Is it worth insuring the loan then?
Insurance of a loan obligation can be very helpful in the event of an unexpected event, such as death, job loss or permanent disability. In the case of compulsory insurance with a cash or mortgage loan, we have no choice but to buy it. However, it is worth choosing the best offer for you.
Credit insurance in case of death
Cash loan insurance is a collateral primarily for the bank and our heirs. In the event of an unexpected event, the insurer will take care of the repayment. Some banks require you to buy additional insurance or to present a ryrant (s). It is worth knowing that sometimes banks accept life insurance. So if we have already purchased this type of insurance, we can save a lot of money.
Credit insurance in case of serious illness
Before purchasing any insurance, you should carefully read its contract, regulations and general conditions of insurance (GTC). It may happen that the insurer guarantees repayment of the loan only in the case of certain, specifically listed diseases. If we get something else, the insurer may not pay us a zloty. The insurance usually also turns off the disease diagnosed earlier than 60-90 days after taking the loan. This is to prevent financial fraud by ill persons.
Credit insurance in the event of job loss
In the case of insurance against job loss, pay attention to all kinds of limits. The contract can also regulate how we lost our jobs. It may turn out that we are insured only in a situation where we lost our job through no fault of our own. As a result, the insurance will not cover situations such as termination of the employment contract by mutual agreement of the parties, dismissal or expiry of the fixed-term employment contract.
What else do you know about credit insurance?
When we take out a loan, it is worth analyzing carefully what is more profitable. It may turn out that a 0% loan will be much more expensive than another loan, in which the interest rate is higher, but the insurance is much cheaper. We usually pay insurance in advance for its entire duration. It is worth knowing that if we repay the loan earlier, we have the right to a refund of part of the money from the unused insurance period.
Free loans, online loans and payday loans also offer insurance. As with any other loan – you should carefully read the contract and the general insurance conditions.
Let’s not treat insurance as another unnecessary formality. Insurance is to be used in the event of an unexpected situation. Since we pay the insurer considerable money, in case of problems, you should report to him.