Legal Question in Credit and Debt Law in India
What happens to the liability of an unsecured loan in case of death? Is the spouse or children liable to repay such a loan?
1 Answer from Attorneys
25.03.2014
Dear Sir / Madam,
An unsecured loan reflected in the books of a/c does not enjoy a charge on any of the assets of the proprietor / partnership firm / Company who has procured it. The lender undertakes all risks regarding servicing and repayment of such a loan. So, if the unsecured loan is given to an individual as a sole proprietor and he / she dies, the lender does not have any legal recourse to recover such loan from the deceased's legal heirs. If it is given to a partnership firm / Company, the lender can at the most sue the firm / Company per se and the partners / Directors jointly and / or severally for repayment.
Regards,
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