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Cease Interest Accrual When Sole Borrower Dies?

When a sole borrower of a consumer loan dies, should loan interest accrual cease immediately?

Answer by Randy Carey: From an accounting standpoint, you would place it in non-accrual based on your assessment of collection from the estate or the liquidation of collateral. From a loan contract perspective, interest would continue to accrue as agreed and the estate would be responsible for payment.


Answer by Richard Insley: Read your note. Often "death of borrower" is included as a type of default. If so, the note's post-default provisions will apply.

First published on 7/15/13

First published on 07/15/2013

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