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News India Live, Digital Desk: We are living in a time where credit card has become an essential part of our pocket. But due to lack of financial knowledge, many people assume that after someone’s death, all his debts automatically go away, or that the family members have to pay that money from their own pockets. The truth is that the reality lies somewhere between these two things.
Let us understand in very simple words what the rules of banks and law say regarding credit card bills.
1. Is the legal heir responsible?
As per Indian law, if you have not signed as a ‘co-borrower’ or ‘guarantor’ on a credit card application, you are not personally liable to repay the loan. Meaning, the bank cannot force you to pay the bill from your own earnings or savings.
2. From where will the bank make the recovery?
Even if the family does not have to pay money from their own pocket, the bank will compensate the deceased for its loss. ‘Estate’ Has every right to do so. ‘Estate’ means the property, bank balances, shares, or other assets left by that person. If there is any house or land in the name of that person, then the bank can claim to recover its dues from him through the court.
3. Does the nominee have any role?
Often people think that becoming a nominee only means getting money. But the rule is that if a person has made you a nominee in his bank account, then you are not the owner of that money but the ‘custodian’. The bank will first recover its loan from that money, and whatever is left will be given to the family.
4. What happens when there is no property?
If the credit card holder did not have any movable or immovable property, then in such a situation the bank itself has to bear the loss. The bank declares this money as ‘NPA’ (bad debt) and writes it off. In such a situation, no legal pressure can be put on the family.
5. Warning about add-on cards and joint accounts
If you had an ‘add-on’ card, the situation may be slightly different. If someone uses that card after the death of the main card holder, it is considered a fraud and the bank can recover the remaining amount from you. Therefore, in such a situation, it is wisest to immediately inform the bank and close the card.
Is credit insurance helpful?
Nowadays many banks also provide a security insurance along with the credit card. If the card holder dies, the insurance company repays that loan. You must check once whether this facility was available on your or your family’s card or not.