A friend of mine had just lost his father last week to a sudden heart attack.

1st problem is his father has RM5k of credit card debt.
He plans on continuing to make payments to the card monthly as fast as he could until the amount is paid off.

2nd problem is his car was registered and insured under his father's name as well as the loan which was also financed under his father's name.
But the monthly installment was paid by him since he started working last year. He will continue doing so because it's his car, he's the one who's been driving it.

So for both cases what should he do? Should he informs the bank about his father's death?
He's afraid of informing the bank because he thought the bank might ask him to pay off the debt and the loan in lump sump.
What is the process/procedure to handle this kind of cases?

Thank you.

1. Don't need to pay the debt.

2. A car ownership goes with the name. It is the father's car, whether you are driving or paying the loan, doesn't mean it is owned by you. Even you pay off the installment, the car is not belonged to you, but the father.

Yes, must inform the bank.

Banks won't able to chase after you on the father's debt.
Banks will follow the estate law, aka use the father left over asset to pay off the debt.
Banks cannot chase after the debt from the family members.

1. Don't need to pay the debt.

Yes no need to pay. The executor of the dad's estate will settle it if there is enough money.


2. A car ownership goes with the name. It is the father's car, whether you are driving or paying the loan, doesn't mean it is owned by you. Even you pay off the installment, the car is not belonged to you, but the father.

This I am afraid is not correct. The ownership is with the financier. His dad has an option to purchase after hiring for a specified time. As such, since his dad is no longer around, he cannot exercise the option. So even if you pay finish the hire purchase, the car cannot be registred under his father's or his name.

Yes, must inform the bank.

Agreed.

Banks won't able to chase after you on the father's debt.
Banks will follow the estate law, aka use the father left over asset to pay off the debt.
Banks cannot chase after the debt from the family members.

i pondered about this as well....

coz recently a lot of ppl from banks call up with this plan to insure your credit cards in the event of your quote "touchwood death due to accident"......

so if your family don't need to pay off your debts, then why these banks can make $$ off such products?

when asked further, they always say......"so that your immediate family members don't need to be burdened by your debts"  - not that i have debts anyway 

so...question is, are the banks misleading you / providing false information? 

The insurance still have its purpose.
Just the term "family members don't need to be burden" is not quite correct.

Let say A got 10K FD, while had 5K CC debt

Scenario 1
So if you bought the PA insurance, the insurance will cover the 5K.

Scenario 2
If no buying this insurance, then A father's asset/leftover, for eg got FD of Rm10k, will be used to offset the 5K debt.

Scenario 1 - family member inherit 10K
Scenario 2 - family member inherit 5K

The difference is there if death.

But this must be death due to accident, if the insurance stated it is an accident policy, other death due to sickness etc will not cover.

Tumpang Scenario:

a debtor have a house worth 400 k and debt 300k then sudden death so how?

lelong the house to get 400 k, 300k to bank debt and 100k to the debtor family?

What about Scenario 3?
Credit card debt 5K with bank A
The 10K FD is at bank B.
No buy insurance.

A friend of mine had just lost his father last week to a sudden heart attack.

1st problem is his father has RM5k of credit card debt.
He plans on continuing to make payments to the card monthly as fast as he could until the amount is paid off.

2nd problem is his car was registered and insured under his father's name as well as the loan which was also financed under his father's name.
But the monthly installment was paid by him since he started working last year. He will continue doing so because it's his car, he's the one who's been driving it.

So for both cases what should he do? Should he informs the bank about his father's death?
He's afraid of informing the bank because he thought the bank might ask him to pay off the debt and the loan in lump sump.
What is the process/procedure to handle this kind of cases?

Thank you.

My dad passed away 10 years ago. After his deceased, we received a letter from the bank sue-ing my mother for my father's credit card debt. I tot the debt dies along with the deceased? Apparently, some ppl said so long the deceased has assets where the bank can Take to repay the debt, thet'll do so. In the end we went to court and we lost the case.

Scenario 4..
Bank A 5k Bank B 10k..
But no FD
Sill need pay for it?
coz sometimes got call for the bank asking buy insurance for the CC..so troublesome

that's where MRTA / MLTA kicks in...

Is different bank practice diff when solving this issues? Sound like Islamic card is good.

i don't understand those terms    please explain

Nope, there are same~~

---

Added on September 9, 2012, 12:18 am
MRTA - Mortgage Reducing Term Assurance
MLTA - Mortgage Level Term Assurance

This is the insurance to cover mortgage loan borrower in case of death or TPD, then the insurance company will settle the loan for the life  insured...

for housing loan...
the mrta/mlta is not compulsory

Debt doesn't die when a person dies. The bank will subpoena anything that legally belongs to the deceased to pay the debt but they cannot touch anything that is not in his name

If it's in his name, they can take it. If it's not, they can't.

Yea, that's why they came after my mom.

Shouldn't bother your mom IMHO. Just liase with whoever is in charge of the funds in the bank or whatever, I'm not sure why they are bothering anyone, they should just make a claim with whoever is current custodian of the funds.

It's just disrespectful to disturb others during their time of bereavement

Shouldn't bother your mom IMHO. Just liase with whoever is in charge of the funds in the bank or whatever, I'm not sure why they are bothering anyone, they should just make a claim with whoever is current custodian of the funds.

It's just disrespectful to disturb others during their time of bereavement

Maybe the mom got some money from the late husband as inheritance or maybe a joint savings account. Since technically the late husband assets still has not been 'divided' among the banks, they can still claim from your mom if she received or shared an account with your late father. IMO.

for housing loan...
the mrta/mlta is not compulsory

Not complusory????
My shared housing with my sister got MRTA/MLTA becoz the bank say it is a must in order to get loan wor.

for credit card if im not mistaken if your father die....amount should be written off....because you or your family member nvr written any form of guarantor....banks cant do anything to u to....but prolly they will try to chase u or family member a bit for payment.but on legal ground they really have no rights to do so....

MRTA is optional if you have other insurance coverage which is sufficient to pay off the house loan.

As for the bank recover the debt from the wife, maybe the house belongs to the deceased, so the bank/creditors has the right to collect the debts back and the balance will then be distributed out to the wife.

for credit card if im not mistaken if your father die....amount should be written off....because you or your family member nvr written any form of guarantor....banks cant do anything to u to....but prolly they will try to chase u or family member a bit for payment.but on legal ground they really have no rights to do so....