• Liability of deceased guarantor in bank loan

My father become guarantor for a loan in Co op bank.then the loan defaulted and borrower is not in condition to repay the loan.

My father passed away 6 months back.

My father had a fixed deposit in the same bank. Now I went to transfer the FD to my mother's name, The bank manager said they will deduct the pending loan where my father was guarantor. Then the remaining amount will be transferred to my mother's name.

Pls advise if I have any remedy ?
Asked 4 years ago in Property Law
Religion: Hindu

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15 Answers

Even though the guarantor died while the loan is still outstanding and the borrower is living, it is for the borrower to repay the loan amount, the bank may not have any right to recover the loan amount from a dead person's account.

However since the amount has been given as collateral security, in the even of the borrower defaulting the loan payment, the bank may discreetly avail that collateral security from the deceased guarantor's account.

However you may issue a legal notice to release the amount and then drag the bank to consumer forum seeking to redress the grievances.

T Kalaiselvan
Advocate, Vellore
78113 Answers
1543 Consultations

5.0 on 5.0

As your father was a guarantor, bank has a right to deduct money from his account and remaining money will be passed on to the legal heirs.

Abhilasha Wanmali
Advocate, Nagpur
1022 Answers
1 Consultation

4.8 on 5.0

Any asset belonging to him can be used to get the money for which he was a guarantor

Abhilasha Wanmali
Advocate, Nagpur
1022 Answers
1 Consultation

4.8 on 5.0

Then the legal heirs of the deceased should file a consumer case against the bank if it is refusing to settle the amount held in the account of the deceased account holder.

T Kalaiselvan
Advocate, Vellore
78113 Answers
1543 Consultations

5.0 on 5.0

Liability of guarantor is co extensive with that of principal debtor

2) bank cannot recover money lying in fixed deposit against pending loan amount by exercising its right of lien merely because your father had acted as guarantor

3) you can sue the bank if it has failed to repay the money lying in fixed deposit

Ajay Sethi
Advocate, Mumbai
87955 Answers
6207 Consultations

5.0 on 5.0

Bank cannot recover loan amount from the fixed deposit lying in the bank

Your father had not given fixed deposit as collateral security

You can sue the bank to recover the money lying in fixed deposit

Ajay Sethi
Advocate, Mumbai
87955 Answers
6207 Consultations

5.0 on 5.0

1. If your father stood guarantor of the loan then on default of the borrower your father can be held liable for repayment of the loan.

2. In the process for recovery of loan the movable or immovable assets of your father standing in his name can be attached and sold.

3. Your father being the guarantor of the loan can not ask the Bank to first approach the borrower and them to start the recovery process.

Devajyoti Barman
Advocate, Kolkata
22515 Answers
402 Consultations

5.0 on 5.0

1) Bank has to go with bank's whole procedure that regarding that particular loan and not mix with FD'S of your father and not make collateral with this loan amount.

2) Are your father's FD was kept as security against that loan. If not than you can transfet FD'S on your mother's name or can withdraw from that bank too.

Ganesh Kadam
Advocate, Pune
12338 Answers
191 Consultations

4.9 on 5.0

This is my response to you:

1. That is a major problem;

2. Because bank has exclusive authority to retrieve money from the guarantor (under the garb of excessive powers);

3. But you can file a suit in the civil court and try seeking court orders restraining the bank from obtaining your father's FD's;

4. Before approaching the court send a legal notice to them.

Gowaal Padavi
Advocate, Mumbai
1920 Answers
5 Consultations

5.0 on 5.0

The guarantor of a loan is liable to pay it if the debtor fails to clear it.

Mohammed Mujeeb
Advocate, Hyderabad
19031 Answers
32 Consultations

4.5 on 5.0

Dear Client,

First of all, bank can recover through court only from the assets inherited from father, no automatic deduction from the FD`s which are not part of guarantee. You can seek court injunction against any recovery.

Yogendra Singh Rajawat
Advocate, Jaipur
21481 Answers
31 Consultations

4.4 on 5.0

bank has the right to liquidate the FD to realise it dues

when borrower took the loan, he must have given some collateral security to bank

so request bank to touch that first before touching your father's FD

Yusuf Rampurawala
Advocate, Mumbai
6882 Answers
79 Consultations

5.0 on 5.0

As a matter of law the SC ahs made it clear that it is the liability of the guarantor to repay if the loan is defaulted.

Regards

Anilesh Tewari
Advocate, New Delhi
17940 Answers
377 Consultations

5.0 on 5.0

The can not recover the same without the due procedure of the court.

Get in touch with some local lawyer and see if some settlement can be made by him.

Regards

Anilesh Tewari
Advocate, New Delhi
17940 Answers
377 Consultations

5.0 on 5.0

Dear Sir,

The legal heirs of the deceased should file a consumer case against the bank if it is refusing to settle the amount held in the account of the deceased account holder. 1. If your father stood guarantor of the loan then on default of the borrower your father can be held liable for repayment of the loan.

Netravathi Kalaskar
Advocate, Bengaluru
4952 Answers
27 Consultations

4.8 on 5.0

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