What happens to a loan in the event of someone’s death?
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What happens to a loan in the event of someone’s death?
My father-in-law took out a loan to by a mobile home based on the fact that I was denied due to some past credit issues. I have been solely responsible for the payments and taxes. In the event of his death how can I protect my investment. I want to still own the trailer, loan, payments if it is not paid in full at the time.
Asked on August 4, 2012 under Bankruptcy Law, Massachusetts
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 11 years ago | Contributor
On a person's death, the loan becomes a debt of his estate. If there are enough assets in the estate to pay off the loans, there would be no problem. But if there are not enough assets (i.e. enough money), then the creditor could repossess or foreclose on any property securing the loan--so in this case, the creditor could reposes the mobile home.
However, the creditor generally does not want to do that: it wants to be paid. It should be possible to work something out with the creditor whereby you would take over the loan and keep the home as long as you pay. That said, it's better to deal with these issues in advance, when possible: you should sit down an attorney and your father in law to figure out the best way to protect your interest.
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