Are the debts of the deceased passed on to inheritance?

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Not everyone knows that after the death of a person, not only the property of the deceased is inherited, but also the unfulfilled monetary and property obligations of the deceased. This means that debts are inherited along with the property.

Banks and collection agencies often take advantage of the heirs’ lack of information and demand payment of the full debt.

How to deal with such a situation and whether it is possible to refuse to assume inheritance debts is explained in this material.

Are debts inherited?

Many people think that when they receive an inheritance after the death of close relatives, they have nothing to do with their unpaid debts, and the overdue loan will be written off. In reality, none of this is true.

The process of entering into inheritance falls within the legal framework of the Civil Code of the Russian Federation. Article 1175 of this legislative act provides for the responsibility of the heirs for the debts of the testator in terms of repaying the debt of the deceased, who executed a will in their favor.

In addition to personal property (real estate, cars, money, shares, etc.), the estate of the deceased also includes his debt obligations. The Civil Code of the Russian Federation does not explain the very concept of debt of the testator, but by reading individual articles of the code, you can understand whether debts are inherited. Check out the list of things you may have to pay for:

• overdue loans;
• unpaid microloans issued by microfinance organizations;
• payments under life annuity or lease agreements;
• documented debts to individuals;
• late utility bills;
• obligations under concluded civil transactions;
• tax debt;
• various fines or penalties accrued to the testator during his lifetime.

Does the heir have the right to refuse debts that may pass along with the inheritance?

The legislation does not strictly define the procedure for satisfying other people's demands. However, this procedure can be conditionally divided into the following stages:

• first it is necessary to pay debts associated with the lifetime treatment, care and funeral of the deceased;
• repayment of tax debts of the testator;
• return of funds received under loan agreements with banks and receipts from individuals;
• meeting the requirements of counterparties for other commercial transactions.

Often, persons who have accepted an inheritance refuse to pay the debts of a deceased relative without any reason. The creditor must then notify them in writing of their claim. Within 7 days they are obliged to satisfy it.

Loan obligations are subject to repayment by successors if the loan was secured, i.e., property was pledged as collateral. You can voluntarily repay such a loan by inheritance with money or transfer the collateral to the bank for sale in order to terminate the agreement.

As for the apartment purchased by the deceased with a mortgage, after his death the bank has the right to take it away from the heirs. This does not take into account the fact that the apartment is their only home and that payments were previously made for it.

Very often, when applying for a loan, the borrower, at the request of the bank, insures his health and life. In most cases, the insurance completely covers the debt of the deceased, and the heirs do not need to worry about anything.

Money borrowed by the deceased against a receipt will be returned by his heirs on the terms provided for the debtor. If the creditor does not have a receipt and cannot document his claim, the heir is not obliged to satisfy it.

In accordance with Article 1175 of the Civil Code of the Russian Federation, debt obligations can be transferred from a deceased citizen to his relatives and his immediate heirs.

Of course, no one will force them to pay their debts - Article 418 of the Civil Code of the Russian Federation provides for the opportunity for relatives and friends of the deceased to refuse to pay debts.

We suggest you read: Refused employment: which court to apply to?

Thus, the heirs may not pay the debt, but under certain conditions.

We list when the credit debts of the deceased may not be paid:

1. In case of refusal of inheritance. If the heirs refuse to receive the inheritance, then these obligations will automatically be removed from them.
2. Upon the occurrence of an insured event. If the deceased entered into an agreement with an insurance company, then there is hope that this company will pay the debt.
3. If there are guarantors. The guarantors will have to pay the debt, and this obligation will be removed from the heirs and relatives.

In these cases, the banking requirements will be fulfilled not by the heir, but by the insurance company. Or the debt will be automatically written off.

All insured events must be specified in the contract, and if they are not, then you should rely on the law. For example, such a case can be considered death during an emergency, car accident, etc.

Remember: even though the person has died, interest will still accrue on the loan.

Then it will be difficult for relatives to prove that they were not aware of the loan obligations; they will have to repay the debt along with interest.

The mortgage that the deceased took out for himself can become a problem for his heirs and relatives. Not always, if you have insurance, your obligations to pay mortgage debts will be canceled.

In most cases, the mortgage debt is paid by co-borrowers, guarantors or heirs.

The insurance company will assume obligations under the mortgage only upon the occurrence of insured events.

All conditions must be specified in the agreement, which the deceased citizen previously had to sign with the company. If the document does not indicate the conditions for the occurrence of insured events, then the debt is automatically transferred to people who, by law, will be required to pay the debt.

Under these conditions, a citizen who turns to the insurer’s company for help will receive a refusal to pay the debt.

Please note that almost every 10 companies refuse a bank claim regarding the repayment of mortgage debts.

Advice: Read the insurance contract carefully before contacting the insurance company!

If the insurance company pays the remaining mortgage debt, then the housing will become the property of the heirs of the deceased citizen - it does not matter whether by law or by will.

Co-borrower

In the case where a co-borrower is specified in the mortgage lending agreement (and usually a relative acts in his role), then all obligations regarding repayment of the remaining part of the loan are transferred to him.

As soon as the co-borrower fulfills his obligations, the mortgaged housing will become his property.

Of course, it will be taken into account what part the deceased borrower paid, whether he had a will, whether he has legal heirs - and other important nuances that can shift the responsibility under the agreement from the co-borrower to another person.

Heirs

The heirs must inherit not only the property, but also the mortgage debt itself. If the insurance company refuses to pay, then the responsibility for repaying the debts will fall on the shoulders of the heirs. This is stated in Article 1175 of the Civil Code of the Russian Federation.

Please note that the amount of debt should not exceed the value of the entire property that the heir receives from the deceased relative. If the difference is large, then you won’t have to pay the mortgage.

Advice: If you cannot pay the debt, contact the bank and report it. Negotiations with a banking company may result in a change in the payment procedure, a reduction in the amount of mortgage payments, which will be beneficial to the citizen.

Guarantors

A banking organization may require guarantors to repay the remaining loan, but this obligation must be removed from them by law. The Civil Code of the Russian Federation states that all obligations from the guarantor will be automatically removed after the death of the borrower.

Banks do not always act according to the law and force guarantors to pay the mortgage loan.

It’s worth proving your rights through court if you encounter something similar.

If you still have questions, ask them to the lawyers on our website.

We will tell you what the procedure for paying debts and loans of the deceased is.

Stage 1. Collection of documentation confirming the death of a citizen

You must obtain a death certificate.

Stage 2. Contacting a notary

He must inform all relatives about whether the deceased person had a will, who the heir is, and what is being inherited.

Stage 3. Entering into inheritance

You need to decide whether you will be an heir or whether you will refuse the inheritance that the deceased citizen left you.

Stage 4. Notifying the banking organization that the borrower has died

If you find out that the deceased has unpaid loans, contact the bank immediately.

Submit a document confirming your death and find out what kind of agreement was concluded, on what terms it was signed, and whether you, as an heir, will pay the remaining balance on the loan.

We invite you to familiarize yourself with the Application for establishing the fact of recognition of paternity, sample

Stage 5. Contacting an insurance company

The company should find out whether death is an insured event. If so, then the citizen must write a statement asking to be relieved of his obligations under the loan agreement to the banking company.

If not, then it is better that you receive a written refusal to your request.

Stage 6. Submitting an application to the court

If you believe that your rights have been violated, please contact an attorney or attorney.

Along with it, you should prepare a statement of claim against the insurance organization, and a denial attachment is required.

1. From the moment a person learned about his obligations to the bank.
2. From the day when the creditor turned to the heir of the debts of the deceased.

The procedure for transferring debts by inheritance

The Constitution of the Russian Federation provides its citizens with the opportunity to receive an inheritance, which is clearly stated in Art. 35. The Civil Code of the Russian Federation introduced the debts of the testator into the estate (Article 1110), and also determined the procedure for completing this procedure.

To enter into their legal rights, the heirs need to accept the debt obligations of the deceased. And from that moment on, they are subsidiarily responsible for the debt of the testator within the framework of their shares from the latter’s property.

When answering the question whether a loan debt is inherited, it must be emphasized that creditors have the right to make claims against both the co-heirs and one of them. If there are no such citizens, their duties and rights are transferred to the state. In addition to the above Art. 1175 of the Civil Code of the Russian Federation, subsidiary liability of those who accepted the inheritance is provided for in Art. 323 of the same code.

The heir who has fully fulfilled the debt obligations of the deceased has the right to recourse. That is, he can claim reimbursement of the amount paid to him by the remaining co-heirs.

Inherited debt can be repaid voluntarily or involuntarily (by court order). If the heir himself acts as a creditor, the legal process for the claim for reimbursement of the loan does not open. If during the inheritance case the heir refuses to accept his legal rights, he gets rid of the fulfillment of the debt obligations of the testator.

When inheriting property, the most unexpected situations are possible. For example, the death of an heir who never entered into legal rights. In this case, the Civil Code of the Russian Federation provides for a transmission procedure for the transfer of property and debts of the deceased (Article 1156), which pass to his heirs simultaneously with the inherited share of the property of the first testator.

What to do if there are no heirs or there is no inheritance itself?

Situations often occur when a deceased citizen has no heirs.

This is possible in the following cases:

• The deceased has no relatives, and he did not draw up a will to involve other persons in inheritance.
• All heirs refused to accept the inherited property.
• The successors are recognized as unworthy to enter into inheritance rights by a court decision.

In these cases, the inheritance of the deceased is recognized as escheat and transferred to the state for inheritance. Real estate remains on the balance sheet of the regional government in whose territory it is located.

The state is the same heir as the citizens. Therefore, he will have to pay off the debts of the testator. The state also pays the loan within the limits of the received share.

Therefore, the state budget will not suffer from the debt of the deceased.

It is worth noting that the state does not have the right to waive the debts of a deceased citizen.

There is also a situation when the testator has no property left at all. In this case, successors are not called upon to inherit. After all, it is impossible to transfer the debt alone to the heirs, because there is no share within which it must be repaid.

In the absence of an inheritance, the creditor has to write off the debt and close the loan due to the death of the client.

Deadlines for transferring debts by inheritance

As you know, banking institutions have a whole bunch of debtors, which explains their untimely filing of claims against heirs. It happens that they have received an inheritance and have already sold the resulting property, but after 1-2 years the bank suddenly files a claim to collect debts from the deceased.

The thing is that, according to the law, the creditor of a deceased borrower has the right to demand that the heirs repay the debt during the limitation period, in this case - 3 years (clause 3 of Article 1175 of the Civil Code of the Russian Federation). This period is counted from the date of violation of obligations, that is, from the date of late payment or the date of full repayment of the debt established by the contract. Moreover, it does not matter who did not pay - the deceased borrower or his heirs. If the bank is late with its demand and the statute of limitations has already expired, its claims will not be considered. Therefore, it is so important to find out in time whether debts are inherited by children and other individuals.

Let’s say the debtor needed to repay the loan before July 1, 2019. But, unfortunately, on May 20, 2020, he dies. Consequently, the creditor has the right to demand repayment of the debt from the heirs until July 1, 2022.

If payments are made monthly, then the statute of limitations for filing a claim is calculated for each missed payment. For example, a late payment for December 15, 2019 can be claimed:

• no later than 12/15/2022 (payment deadline 01/15/2020);
• until 01/15/2023, etc.

It is important! The court does not automatically take into account the limitation period. During the consideration of the case, it should be stated that the plaintiff has exceeded this date. This is done orally or in writing for inclusion in the minutes of the meeting.

Fines and penalties for the debts of the testator

Sometimes an inheritance falls on people’s heads unexpectedly, along with debts. Credit institutions that did not know about the death of their client continue to apply penalties and interest for late payments and violation of contract terms. As a result, when the heir comes to the bank, there is already a decent amount of debt.

Having inherited an outstanding loan, the heir himself becomes a debtor and is subject to a lending agreement, which obliges him to comply with the payment schedule.

During the period of entry into inheritance rights (it is six months), the bank will charge interest on late payments. But he has the right to demand repayment of the debt after issuing to the heir a certificate of acceptance of the testator’s property.

If this condition is not met, then the newly created debtor may file a lawsuit in order to cancel the creditor’s premature claims.

Article 333 of the Civil Code of the Russian Federation states that the penalty can be reduced if, by a court decision, it is considered disproportionate to the bank’s costs from overdue debt. A weighty argument in this case will be the fact that the delayed payment is not a consequence of bad faith, but the result of force majeure circumstances. The guilt of the heir as a debtor comes into force only after registration of his certificate of inheritance rights.

When a debt passes to a relative

Contacting collectors In such cases, banks and credit organizations turn to collection agencies, and psychological pressure begins on the debtor’s environment. And if in many cases these actions are not regulated in any way, then there is a certain category of relatives in relation to whom the actions of banks and collectors are completely legal.

Collection from relatives is legal. Which relatives have the right to collect the debt of the debtor? These are several categories:

A relative who spoke with the borrower of the debtor; A relative who acts as a guarantor for the debtor; Relatives of the debtor, who become heirs after his death. The debtor's spouse, if it is proven in court that the funds were spent exclusively on the family.

When does the debt pass to the heirs? It is necessary to find out, when deciding to enter into an inheritance, whether the testator has debts. Since the heir does not have the right to accept only the property benefits provided to him by way of inheritance, and to refuse the obligations of the testator to the bank.

If, at the time of the debtor’s death, the bank lost the right to present claims due to the expiration of the statute of limitations, a similar rule will apply to the heirs. It must be borne in mind that from the moment the rights to the inherited property are transferred, the bank will have legal grounds to demand payment of the debt. If the debtor has several heirs, then the bank has the right to make demands for payment of the debt against each of them.

In what cases can an heir avoid transferring the testator's debt? After the notary opens the inheritance case, you have six months to submit an application to accept the inheritance. You have the right to refuse to accept the inheritance if, for example, it turns out that the value of the inheritance is significantly less than the debts. During the filing period, the statute of limitations for filing claims by the bank may expire. In this case, you have nothing to fear - you can safely submit an application to accept the inheritance. The bank does not have the right to make demands for collection of debt, which in total exceeds the property received by the heir as an inheritance.

It is also important to know that in the case of a guarantee, the bank has the right, and not the obligation, to demand collection of debt from relatives, and in the case of inheritance, the loan debt passes to the relatives automatically with the acceptance of the inheritance.

The bank, represented by its representatives, cannot demand from relatives the repayment of the debtor’s debt without serious legal grounds for this, which were listed above, otherwise all their actions will be illegal and relatives who are under pressure from the bank can defend their rights.

Many citizens, not knowing their legal rights, pay the debts of a relative when pressure is exerted on them. To avoid unnecessary waste, you need to familiarize yourself with your rights.

The nuances of transferring mortgage debt

Let's figure out whether debts are inherited if the deceased took out a mortgage loan during his lifetime. There are a lot of different subtleties here. If the borrower has returned an insignificant amount to the bank, which is much less than the entire debt, it is better for you to refuse to inherit.

Another situation is when the loan recipient entered into a life insurance contract and made appropriate contributions. Then the entire debt with interest for the penalty to the credit institution is repaid by the insurer (if this is specified in the contract).

The main thing here is to submit all documents on time to the insurance company, which must repay the loan. Then get them to recognize the death of the testator as an insurance risk. And after full payment of the loan, the heir receives the right to own the property of the deceased.

In addition, there is the option of selling the inherited home to pay off the debt to the bank. The heirs can distribute the rest of this money among themselves. If mutual agreement to sell the property is not reached, the problem must be resolved through the courts.

Does the guarantor pay the debt of the deceased?

When applying for a consumer loan for a large amount, a car loan or a mortgage, banks most often require the involvement of guarantors as security for the fulfillment of debt obligations by the borrower.

The guarantor is a responsible person who guarantees the reliability and solvency of the client receiving the loan.

If the borrower dies, the lender may require the guarantor to pay the debt. In this case, the responsible person should contact the heirs and discuss further actions to pay off the loan. If there are successors, then they must pay the debt. If they refuse the inheritance, the bank will demand repayment of the loan from the guarantor.

If the guarantor also passes away without having time to pay the debt of the main borrower, the debt is written off. The heirs of the guarantor are not obliged to fulfill his obligations to the bank.

Ways to find out about the testator's loans

There are now thirteen credit history bureaus operating in our country (this data is taken from the State Register). The law obliges banks, credit organizations and microfinance organizations to report information about clients to at least one bank credit institution. They independently choose where to send the information. Perhaps even several offices.

To find out where the financial dossier of borrowers is located, notaries make inquiries to the Central Catalog of Credit Institutions (CI Central Catalog). This is allowed only in the event of the death of the borrower as the subject of the credit history.

To open an inheritance case, the heir submits an application to the notary's office, in which he sets out a request to verify information according to the BKI. He then makes a request to the Central Catalog and individual bureaus. The latter provide a response within 3 days from the date of registration of the request. As a result, the heir will find out where the loans of his deceased relative are.

To speed up the search for current creditors, we recommend that you do not put this problem off for a long time and do this before taking over inheritance rights.

If the borrower prudently insured his bank debt, this becomes known to the lender. Find out from the bank if this is true and whether the loan debt is inherited. Typically, lenders will ask to see their client's death certificate. Then they give the information you are interested in, but they may respond within a few days.

By refusing an inheritance, you also refuse debts.

However, if it is a large debt, you should prepare for likely calls and reminders about the existing debt. In this case, it is important to understand two things: firstly, before entering into an inheritance, you are absolutely free from any obligations to pay the debts of deceased relatives (unless, of course, you were in a marital relationship with them); secondly, no one has the right to bother you with calls or visits to your home. Creditors may tactfully inform you of the deceased's debt, but this communication should never be intrusive. If collectors or employees of banks or microfinance organizations begin to harass you, feel free to write a statement to law enforcement agencies.

So, after sending a copy of the borrower’s death certificate and a request for forgiveness of his debt to the bank or microfinance organization, you should familiarize yourself with the details of the debt. If your request for debt forgiveness has not been granted, you should at least ask for a reduction in the interest rate or a suspension of interest accrual. In practice, banks very rarely engage in such charity, since bank loans are taken out under very strict conditions, imposing much greater responsibility on the borrowers and their heirs. But MFOs are different from banks - given the relatively small amounts of loans and the ongoing struggle for a good name and the best position in a very saturated market, microfinance organizations may well meet you halfway.