Skip to content

Cease Interest Accrual When Sole Borrower Dies?

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

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: 

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 BankersOnline.com 7/15/13

First published on 07/15/2013

Filed under: 
Filed under lending as: 

Banker Store View All

From training, policies, forms, and publications, to office products and occasional gifts, it’s available here:

Banker Store

hot right now

image description

Looking for effective, convenient training on a particular subject?

BOL Learning Connect offers more than 200 courses ON-DEMAND or on CD ROM from AML to Reg Z and every topic in between.

Search Topics