Settlement of outstanding debts of a dead person
my father passed away in may 2014.He was a contractor in millitary engineering service(MES).He had taken money for work from a bank against mortgage of our house.My father was the sole proprietor of his firm and as per MES rules if the sole proprietor dies, the firm ceases to exist and is de-enlisted from approved list of contractors.I am his eldest son 24 years old IT engineer but currently unemployed.The loan is to the tune of 15 lakhs.Clearly i am in not in a position to pay it back right now.So how should i approach this situation legally?
Asked 3 years ago in Business Law from Srinagar, Jammu and Kashmir
Bank will issue a notice to all the legal heirs of the deceased to clear the dues and if no legal heir is volunteering to clear the loan then the bank, after publishing a Public Notice in leading newspapers, would auction the property and the proceeds would be set off against the outstanding loan amount and if any excess money is still left with the bank, the same would be distributed equally to all legal heirs, subject to production of Legal heirs' Survivorship certificate from revenue authorities or certified family tree and an affidavit from all legal heirs to that effect.
1) since loan had been taken by your father against mortgage of house on his death legal heirs who have inherited the house will have to repay the loan .
2) in the event you fail to do so bank will auction the flat for recovery of outstanding dues of Rs 15 lakhs .
3) the balance amount if any on sale of flat and after adjustment of loan amount would be paid to the legal heirs
4) approach the bank and request for rescheduling of the loan amount so that EMIs are reduced