who is left responsible for this loan?
hi, my daddy recently passed away and it was unexpected. my question is he had a personal loan from a business he and a friend had sold and taken a loss on a couple of years ago.the balance is around 40,000 and his ex friend is sorry and never really made a payment.almost every payment made for the past 3 years was by my daddy. his friend never really got another job or tried to make an income of any kind and just lives off of other people. anyway, the only colatteral on the loan are my dads 2 vehicles which are only worth about 10,000 combined and the bank is telling my mom that they can take the balance owed out of my daddys life insurance she will get. that would take almost 1/2 of it from her. is she responsible for the balance owed or is his friend/ ex business partner whose name is on the loan with my dad? my mom is not now and has never been on the loan at all. thanks!
- Anonymous1 decade agoFavorite Answer
You need good legal advice in this situation. If the loan was personally guaranteed by your dad and/or his partner, then possibly the partner has some responsibility.
If the loan was made to the business, then only the business assets can be seized for payment of the loan.
If the loan was personally guaranteed by your father and the sale of the collateral is not sufficient to repay the loan, then the loan is essentially unsecured at that point. It is very doubtful the bank could take your mother's life insurance proceeds. I think that it's possible the bank is trying to get your mother to voluntarily agree to repayment because they know that they cannot collect in any other way.. She should not enter into any agreements without the advice of an attorney.Source(s): retired banking executive (32 years)
- 1 decade ago
Years ago as a claims adjuster, bank loans always carried mandatory life and disability insurance coverage on the loan. Check with the bank rep that's calling and get a copy of the loan papers to see whether insurance fees were paid during the repayment of the loan. I do not believe your mother is responsible for this loan since it was a business loan with your father and another person.