You are liable to pay debts only to extent of your inheritance
your father as guarantor is liable to repay the loan
your personal properties would not be sold to recover balance loan amount as you are not guarantor of loan
Mortgage loan repayment responsibilities and legal implications
Dear Community Members, We currently have a mortgage loan with Canara Bank in West Bengal, amounting to 15 lakhs against a business mortgage. The loan was originally taken out in my mother's name, with my father acting as the guarantor. Due to circumstances, my mother became unable to meet the EMI payments since 2013. Consequently, legal proceedings were initiated, culminating in a court-ordered auction of our property under the Sarfaesi Act. However, my mother contested the matter in the district court, which remained unresolved until her passing in 2018. With my mother's demise, the responsibility for repaying the loan has shifted to my father and me, as legal heirs. My concern now lies in the eventuality that my father, who is currently ill, may not be able to settle the outstanding amount. The loan, which has now been classified as Non-Performing Asset (NPA), is being claimed at a substantially higher figure[approx in Crores including the interest], allegedly incorporating accrued interest over the years. Given this situation, I seek clarification on the repercussions for me, particularly since the loan was procured when I was a minor. While I am prepared to offer all properties held under my father and mother's names to resolve the debt, I am uncertain about the implications if the auction proceeds fail to cover the outstanding balance. Specifically, I am concerned whether the bank can pursue recovery of the remaining amount from my personal savings and any properties I own. Your insights into this matter would be greatly appreciated. Thank you for your attention.
Asked 1 year ago in Property Law
Religion: Hindu
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6 Answers
You are liable as a legal heir to your parents to repay the loan amount to the extent of the property you inherited from them and not beyond that.
Hence the bank can bring only those properties lying on their name to satisfy the loan amount.
They cannot lay their hands on your personal property because you have not obtained the loan.
Hence your personal assets cannot be touched by them.
- As per law, the bank cannot get order of attachment property of son for the debt of mother or father, because son`s assets will be treated as their respective separate properties.
- Moreover, if you got movable or immovable properties through inheritance then only, your liability to pay the debs, after selling those inherited property.
- Hence, the said bank cannot recover the amount from you in the absence of any agreement or guarantee by you.
- Since, your father is guarantor in the said loan , then bank can take legal action against your father for the recovery of the loan amount.
- Further ,as the property documents are mortgaged with the bank , then the bank can recover the loan amount after selling/auction of the said property
- Further, if there is balance then the bank can approach the court for the recovery of the same , but not against you.
- Your father can approach the bank to settle the loan amount after giving his present financial position .
And interest cannot be in course as after 3 bounce ,accounts becomes NPA. No interest charges.
Dear client
I understand this is a stressful situation. Here's a breakdown of your situation and some potential next steps:
Repercussions for You:
Since you were a minor when the loan was taken, you generally cannot be held personally liable for the debt. The bank's recourse would primarily be against the mortgaged property and your father's assets as guarantor.
Outstanding Amount and Negotiations:
The high claimed amount due to accrued interest is a common issue with NPAs. It's crucial to negotiate a settlement with the bank. Here's how you can approach it:
Gather Documents: Collect all loan-related documents (agreement, repayment history, court order etc.)
Dispute the Claimed Amount: You can contest the high interest amount with the bank. Present a clear breakdown of the original loan amount and any payments made.
Settlement Offer: Propose a settlement offer that considers the property's current market value and your capacity to repay.
Resolving the Debt:
Auction and Settlement:
If the auction proceeds cover the entire outstanding balance (including a negotiated settlement), the issue is resolved.
If the auction proceeds fall short, the bank can pursue recovery from your father's assets as per the guarantor agreement.
Personal Assets:
As you were a minor when the loan was taken, your personal savings and properties are generally not at risk unless you used them as collateral for the loan or signed any guarantee agreements yourself.
Communication with Bank: Maintain open communication with Canara Bank. Explain your situation and willingness to resolve the debt.
Explore One-Time Settlement Schemes: Banks often offer one-time settlement (OTS) schemes for NPAs with a significant discount on the outstanding amount. Explore this option with the bank.
Only if you have received any benefits of the said transaction for which bank is claiming recovery from you then only they can otherwise they don’t have amy right
