Applying for a loan when facing an urgent need is an alternative that is often taken. However, some cases of loan applications encounter unexpected things. For example, a debtor dies before paying off his loan repayments.
Automatically, this becomes the responsibility of the debtor's family concerned. If the loan amount proposed has a large nominal value, of course, this will confuse family members who have to bear the debt.
For those of you who are experiencing this condition, you can use the following steps as a guide to solving it.
1. Legal Basis If the Debtor Dies Before Repayment
The death of a debtor certainly brings sadness to the family left behind, especially if there are dependents that have not been resolved. According to Indonesian law, debts included in the "inheritance" must be borne by the heirs. However, the remaining loan debt burden is only required to be repaid by the heirs who are willing to receive the inheritance in full. For more details, see the following legal basis.
- Civil Code Article 833 Paragraph 1. In that article, it is stated that the heirs, by law, get ownership rights to all goods, all rights, all goods, and all receivables of the person who died.
- J. Satrio, S.H. in his book entitled "Inheritance Law" (Page 8). It is stated that inheritance is wealth in the form of a complex of assets and liabilities of the heir which is transferred to the heirs. In short, the heirs are still required to settle outstanding debts.
- Article 1100 of the Civil Code. The heirs who have agreed to receive the inheritance, then they must share in the payment of debts, wills, and other burdens, in proportion to what each received from the inheritance.
2. How to Pay off Loans If the Debtor Dies Before Repayment
No one knows when someone's death will come. If you are mandated to become an heir, then you are obliged to pay off the debts left behind, there are several ways to pay off debts that can be done to deal with the case of the debtor passing away.
2.1. Visiting Financial Institutions
The first step you have to take is to go to the financial institution in question. Convey the sad news that the debtor has passed away and confirm the remaining loan amount with the creditor. This aims to determine whether the family can determine the next step with a known loan value. Especially for heirs who are responsible for that nominal. After that, also confirm whether the loan fund is covered by credit insurance funds.
2.2. Fiduciary Guarantee
A fiduciary guarantee is an agreement between a debtor and a creditor made by a notary. This guarantee regulates the right of ownership of an object. Generally, this guarantee exists in financing companies such as leasing for vehicle loans or banks that offer mortgage loan products. The guarantee usually states whether or not a credit can be transferred if the debtor dies.
If the existing fiduciary guarantee is made without the knowledge of a notary, then credit items in the form of motorized vehicles or houses cannot be withdrawn by the creditor.
2.3. Utilize Credit Insurance Funds If Available
If the loan has been covered by insurance, the loan funds have been paid off automatically. Because this facility itself is indeed provided by financial institutions to anticipate if the debtor dies and the loan has not been paid off, in collaboration with the insurance. If the loan has been insured, you can collect the documents needed to withdraw the funds for the insurance facility. Some of the documents needed include:
- Certificate (SK) of Death
- Decree of heirs from district/village
- Power of Attorney of Heirs
- Photocopy of the Customer's KTP
- Photocopy of Heir's KTP
- Photocopy of the debtor's family card
- Photocopy of Marriage Certificate (for those who have a partner)
- File claims from financial institutions
However, also make sure whether the condition of the loan is in the current or bad category. This is because claims for credit facility funds will only be given if the debtor's credit is in current condition.
2.4. Asking for Leisure
If the loan funds are not insured, then you or a family member as the heir of the deceased debtor must be responsible for paying off the remaining loan funds. If the nominal loan is considered too heavy, then you or your family members can apply for relief. Generally, the form of relief provided is in the form of a reduced number of installments, installment interest, tenor, or extended repayment period. Usually, it is not possible to apply for a complete loan write-off.
Also Read: Must Know, Here's How to Calculate Accelerated Credit Repayment
3. Anticipation of Unpaid Debt in the Event of Death
Leaving a beloved family with unpaid debts can certainly be a moral burden in itself. To anticipate this so that your family is not burdened, the following method can be a preventive action in cases where the debtor dies.
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3.1. Register for Insurance
Credit insurance is very useful for anticipating various financial risks that may arise in the middle of the road. Including if the debtor dies due to an accident, natural disaster, and other things that have been regulated in the insurance policy.
The existence of this insurance not only benefits the debtor but also the creditor because the repayment of the remaining credit will be borne by the insurance party, thus reducing the risk of default.
There are two credit insurances in Indonesia, namely productive and consumptive. Productive credit insurance is usually used for productive debt such as business capital loans in the form of KUR (People's Business Credit). Meanwhile, consumer debt insurance is intended to avoid the risk of default on loans similar to KPR (Home Ownership Credit) and KKB (Motor Vehicle Credit).
3.2. A Realistic Debt Payment Plan
When you plan to take out installments, it's important that you think of a realistic plan for paying it off. For example, by setting aside a portion of your monthly income for an emergency fund if at any time you cannot pay off your installments.
3.3. Avoid Adding New Debt
If the debt you currently have is large, it's a good idea to avoid adding new debt. Because new debt will only add to your burden to pay it off and it is very risky to fail to pay or even dig a hole to close a hole.
BFI friends, that's a review regarding the debtor who died. Hopefully, this article can help you or a family member to pay off loan funds left behind, yes. If you plan to take credit, make sure you prepare important documents such as a will that designates who is the heir or who will bear the obligation to pay off the credit. This is intended to avoid conflicts that may arise between heirs.
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