Managing loan repayments during bereavement or illness

Mohan JayaramanNo matter how much we prepare for death, it still comes knocking unexpectedly and can leave us all at sea, especially if the deceased is a close relative or friend. However, preparation is always better than none at all as this helps us deal with the situation better as well as soothe some part of the pain. While dealing with the death of a loved one is stressful enough, managing and trying to understand his or her finances post the death, poses an additional burden on a grieving family. It is important and critical to understand the financial obligations of the deceased. In certain cases it is possible that bills or credit payments are the joint responsibility of two people. For instance, if it's your spouse, some of the bills may be in both your names. You are not responsible for debts that are not in your name, but if the deceased person has mentioned you as the guarantor or the joint account holder, the status of these loans is shown on your credit information report and you might find that any missed payments could prevent you from getting credit in the future.In cases like these, it is prudent to stay one step ahead by getting a record of all debt or loan payments that the person owes, the time frame within which the payments have to be made and the value of the payments. It is also important to check the names of the guarantors or representatives, if any. Given below are a few tips on what you should do to handle the credit payments of your loved ones in the unfortunate event of their death, or illness. Get a credit information report: A credit information report shows you details of all the credit accounts the person has and how much they owe. You can obtain this certificate by proving that you have power of attorney or by proving that you are the executor of their will.Inform respective lenders /creditors: It is important to get in touch with the person’s creditors and inform them about what has happened. You can let them know that you will stay in touch to discuss what has to be done to ensure the debts are paid off. Inform authorities concerned to avoid identity theft / identity fraud: Identity fraud is a common problem today. Fraudsters usually target the accounts of deceased persons to apply for credit. You can ensure this doesn’t happen by informing the authorities who have issued official documents like a PAN card, Electoral Card, Driver’s License and the like. Get a death certificate: To do this, you will have to fill an application form, which is usually available with the area's local body authorities, or with the Registrar who maintains the Register of Deaths. You might need to submit proof of birth of the deceased, an affidavit specifying the date and time of death, a copy of the ration card, and the required fee in the form of court fee stamps.When a loved one passes away or is severely ill, the last thing on your mind will be sorting out their finances, which is why you should look after these formalities today. To ensure your own death or illness doesn’t cause any further distress for your family and friends; it is advisable to create a will. A will of one’s own self or your loved one, will make sure all liabilities and assets are clearly stated. Keep in mind it is important to select someone you trust to be your executor, because they will be legally responsible for carrying out your wishes. It is also recommended that you buy yourself adequate life insurance and a medical insurance cover. Make a list of the financial commitments you have, who they are with, how much needs to be paid and when. Make sure the list is always up to date and keep it with a copy of your will and credit information report. This will ensure that in the case of any untoward incidents, someone can quickly and easily sort things out for you and make sure that your lenders know what the situation is.Author is MD, Experian Credit Information Company of India Pvt. Ltd. & Country Manager, Experian India