Are Son And Daughter Liable To Pay Deceased Father's Debts?

The Indian law earlier validated that it was not just the moral duty of the son but also a legal obligation to repay his father's debts in case the latter has died. However, the Hindu Succession Act, 2005 changed this norm. Here's why.

Rajat Sharma lost his father a few years ago. His father not just left him a physical void but also medical expenses, a defaulted home loan and some personal loans he had taken from his acquaintance. Although Sharma decided to pay off the debts slowly, he realised that this financial burden is too much to handle given he had a family to take care of.

As per the Hindu Succession Act, 2005, Sharma is not liable to pay back his father's debt out of anything that he had made out of his own income or savings. He is only liable to pay out of what was his father's property and his inheritance in the same. For instance, the bank would auction his father's house to recover the dues, but, the law doesn't allow the banks to liquidate Sharma's house if he is not a co-borrower. However, the banks may check whether Sharma or his other siblings were willing to get the home loan transferred in their name. In some cases, the children may want to repay the home loan and not get their father's property auctioned. However, if a son cannot afford or doesn't want to take on an additional expense, the banks cannot force the legal heir.

Also read: Who Has The Right Over A Woman's Property?

In case Sharma's father had taken a personal loan or there was a credit card debt, legal heirs had to pay off the debt. It is better to repay before the debt mounts and the banks decide to file a civil suit against the heir or heirs.

Other obligations such as personal tax are dissolved on the death of the person while loans from friends and family members are also not usually forced on legal heir unless there is a legal document which says that upon death, the son/s are liable to pay back. In all the above cases, it is best to consult a lawyer who can guide you. 

Sometimes, banks also show leniency and may negotiate on the interest rates or penalties if any. A lawyer may be able to guide you, given your personal opinions and issues.

Pushp Dev Singh Gill, practicing lawyer and authorised notary, says, “You are not liable to pay the debts taken by your father and recovery can be made from his estate which he may leave behind and which you inherit. Recovery from you can be a possibility if you stand surety for the repayment of the money borrowed by your father or in case you are a co-borrower. You cannot be made liable to pay from your pocket or personal properties. In some states, for example in Punjab, a notification has been issued by the state government permitting a person to transfer his properties to any one or more of his legal representatives without the payment of stamp duty, registration fee and other levied expenses irrespective of the value of the property being transferred. The said transfer deed is duly registered in the office of the sub-registrar of property.”

Are the women also obliged to pay off the debts?

Legal heirs include the wife and daughter/s as well. Therefore, the banks can approach children and the widow to recover (or transfer the loan/debt). All these heirs in dire cases may have to part with their inheritance in the deceased's property although a mother's property cannot be attached or liquidated by banks.

Also read: What Are The Property Rights Of Widows?

Jaipur-based advocate, Ashish Davessar, says, “If the lenders proceed to recover the debts from you on the basis of the promissory notes executed in their favour, the court can hold you liable for the repayment of debt to the extent of the property of your deceased father which you have inherited. On your failure to repay the amount the court can order attachment and sale of it to recover the debt. Your personal properties cannot be proceeded against as you have no personal liability to repay the debts of your father. Your mother's share in the properties of her husband can also be dealt with in a similar manner.”