If a person borrows money from a bank before his death, does he need to return the money after his death? Nowadays, many people borrow money from banks to satisfy their material desires by spending ahead of time. But what if you can't pay back what you owe? Some people may wonder if they don't have to pay back the money after they die. In fact, banks also have their own ways of coping.
We don't have to worry about banks, because when banks lend or issue credit cards, they will evaluate factors such as the borrower's asset situation, credit history, health status and repayment ability, and the review mechanism is very strict. The purpose of bank lending is to allow the borrower to work around the bank, and if the borrower simply has no ability to repay, the bank will not lend.
If all the assets left behind by the debtor's death are not sufficient to cover the debt, whether the spouse and children will be required to repay the debt depends on the circumstances. If it can be proved that the money was used for the couple's living together or was maliciously overdrawn by the children, the bank may require the spouse or children to repay part of the debt. However, if the debtor is alone, or if all his money is spent on himself, the bank may consider itself unlucky.
For the issue of credit card cashing left after the debtor's death, the bank will deal with it on a case-by-case basis. In 2016, an eldest brother received nearly 2 million yuan by cashing out 5 credit cards after learning that he was terminally ill. After his death, his family submitted a statement to the bank and liquidated the property and other assets to return to the bank, but there were still some outstanding debts. In the end, the bank did not pursue further.
While in some cases, the bank may not be able to recover the full amount owed, this does not mean that the debt is "dead". When banks make every loan, they set aside a provision for bad debts in case of sudden death or bankruptcy of the debtor to minimize losses.
If it is a company or even a state that maliciously defaults on its debts, it may lead to serious consequences. In 2017, Japan's Osaka Economic News reported that the uncollectible bad debts of Japanese companies in India had reached 120 billion to 150 billion rubles, which brought huge financial pressure to investors and could even lead to the collapse of the entire Asia-Pacific economy.
India's bad debt problem is mainly due to the wide gap between the rich and the poor, high unemployment, and waves of bankruptcies triggered by the pandemic. India's poor people have a weak sense of law and do not pay back when they are killed; Indian companies will deliberately default on their debts in an attempt to bring down investors' capital chains and achieve the goal of defaulting on their debts. In addition, India's corruption, ethnic and religious issues are complex, which makes it difficult to effectively control illegal debt defaults.
In contrast, the problem of bad debts in the United States is more severe. The U.S. is the world's largest importer, and the size and base of transactions are large, so the likelihood of bad debts is also higher. In addition, the process of registering a company in the United States is very simple, and the registration fee is also low, which has led some leather bag companies to take the opportunity to open a company in the United States, thus reducing the credit quality of the American company.
The idea of "death and debt" is difficult to apply in practice. When lending money, the bank will assess the borrower's credit profile and ability to repay, and for debts that cannot be repaid, the bank may cover the loss through the debtor's estate, heirs, or bad debt reserves. However, bad faith defaults by companies or countries can have a serious impact on the economy. Therefore, it is very important to strengthen the best control, improve credit awareness and establish a sound financial system to prevent bad debts.