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#338172 - 03/24/05 07:30 PM death of debtor

Quick question...Our debtor on a car loan passed away. He was the only one on the loan. There is no will. His family wants to continue to make payments on the loan until it's paid off and then get title transferred to the family. This doesn't sound like it could be done without rewriting the loan with the family's name. Any questions or comments?

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General Discussion
#338173 - 03/24/05 07:52 PM Re: death of debtor
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 46,849
Bloomington, IN
Your debtor died intestate. His, or hers, assets will be settled according to your state law. You would be a secured creditor and would/should have rights to your collateral. Any excess you gain above the amount owed you, plus expenses would more than likely go into the estate.

I suggest contacting your attorney and take immediate steps to protect you collateral. You may be able to take possession and sell it back to the relatives - however if there is considerably less money owed than it's worth - state law may require you to sell it for fair market value.

Again, I advise contacting your attorney for the appropriate steps to take.
The opinions expressed are mine and they are not to be taken as legal advice.

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#338174 - 03/24/05 08:31 PM Re: death of debtor
Ski Online
Platinum Poster
Joined: May 2003
Posts: 639
South Louisiana
Good advice from Dan. Also consider the time frames established by the FFIEC in their "Uniform Retail Credit Classification and Account Management Policy".

The revised policy states that closed-end loans, such as installment loans, should be charged off after they are 120 days delinquent and gives the following guidance: "In cases where the borrower dies, loans should generally be charged off when the bank determines the amount of loss or within the charge-off time frames, whichever is shorter."

A good reason to get the bank's attorney involved as quickly as possible.

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#338175 - 03/24/05 11:05 PM Re: death of debtor

Is the balance on the loan high? If not, could you just "hang tough" through 6-12 months of payments rather than re-write it, etc.

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