If multiple reasons can prevent a borrower from honoring its credit maturities, death is the only imponderable that exempts you forever from any repayment ... But this is not necessarily the case with your family, who may have to make accounts to your creditors.
It all depends on the type of credit still in progress at the time of death.
Consumption: loans still due
Despite what one might think, debts incurred during our lifetime do not go out when we die. Your loved one had not yet fully paid the deadlines for his car, his television or his washing machine? Like any debt, the capital remaining to be repaid in the context of an outstanding consumer loan will enter the estate as a liability and be deducted from the patrimony of the deceased. It is then up to the heirs to decide whether they accept the inheritance outright, even if it means paying debts greater than the amount of the inheritance, or rejecting it as a whole.
Intermediate option, it is possible to carry out an "acceptance at the only competition of the net assets", in order to receive his share of the inheritance without having to pay the debts which would exceed the value of the assets of the deceased.
It is a way to protect your own possessions from potential creditors.
If the consumer credit had been co-subscribed by a married couple, the surviving spouse will have to pay all of the remaining monthly payments, unless they can claim death insurance, which is rarely the case in this type of loan. .
For real estate: death insurance takes over
Conversely, all banks require you to take out this insurance coverage for the granting of a mortgage. Indeed, this guarantee is an obligatory part of the borrower insurance. However, if the amount of this protection is often criticized, we understand its interest when the debtor disappears while there are still several tens of thousands of euros to repay ... Instead of making the heirs bear the weight of the monthly payments. deceased, it is the insurance that will cover the capital remaining due on the day of death, provided that the conditions of application are met. The debt will thus be settled and the property integrated into the heritage of the succession.
In the same way, if the loan had been jointly subscribed by two people, the death guarantee will make it possible to reimburse the part of the deceased, but only in proportion to the insured portion.
When taking out this insurance, it is therefore common for the co-borrowers to each insure 50% of the loan amount.
In the event of death, the insurer will therefore pay only half of the outstanding capital, leaving the surviving co-debtor responsible for paying his own share.
For a necessarily higher cost, it is however possible to insure each of the totality of the credit.
In this case, the company will have to pay the full amount due on the death of one of the subscribers.
Beware of insurance limits
If death insurance protects your heirs and your co-borrower, it has certain limits that should not be overlooked when taking out the loan. In terms of age, first of all, each insurer sets a maximum threshold for subscription, but also for the application of the guarantee. Most often, it is possible to take out this insurance coverage up to the age of 80. On the other hand, and this is much more problematic, the warranty limit varies, depending on the contract, between 75 and 90 years. Enough to limit the mortgage of seniors, under penalty that the risk of death is not covered until the term of the loan ...
In addition, be sure to carefully consult the cases of exclusion of warranty before committing, to avoid unpleasant surprises.
Note, for example, that the law requires borrower insurance to cover death by suicide from the first year of the contract for a loan intended for main housing, but only from the second year in other cases.
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