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What Happens to Debt When You Die in South Africa

When it comes to your debt and taxes in South Africa, death is not absolute.

According to Sanlam, the bad news is that if you have debt on your possessions, such as your car and home, “they will not become sweet parting gifts from the creditor to your loved ones.” They must still be paid for or they will be taken away.


“That doesn’t mean your family is accountable for your loans; however, if the loans are unsecured, the creditor can seek your estate for the full payment, which is similar.” If you haven’t protected your assets, they can be used to pay off the debt.


“It might also mean that if you cosigned a loan with someone, that person will be totally liable for the entire amount.”


If you do not have life insurance, all of your assets and liabilities will be placed into an estate when you die, according to Sanlam. Your assets include your home, car, furnishings, and cash in your bank account. Basically, anything with your name on it that you purchased. Your liabilities include all of your debts.


The following could occur:

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Your assets will be utilized to pay off your debts: Whoever is appointed as executor of your estate will sell your assets to pay off your outstanding debt. Whatever remains after all debts have been paid will be allocated to your dependents.


If the executor determines that you do not have enough assets to cover your outstanding obligation, the debt may be annulled. Unless your dependents have cosigned the debts or signed surety, the executor will be unable to pursue them for the unpaid sum. In this instance, the debt sharer will receive the entire debt.


What happens to your debt once you die?

  1. It is possible that your assets will be liquidated.

If a will exists, an executor of the estate named in the will will be appointed. Their primary responsibility is to discover the property and money left behind (referred to as the “estate”) and pay off all debts and liabilities before distributing the balance to the beneficiaries named in the will.


  1. Identifying if the debt is secured or unsecured

Secured debts are debts that are secured by specific assets. When a bank loans you money, they may need you to provide security for the loan. That is, if you stop paying payments, the bank can seize particular property (referred to as the security property) and sell or use it to recover the amount you owe.

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  1. determining who is liable for the debt

According to Old Mutual, if your debt is shared with another, such as credit card debt shared by spouses or business partners in their own names, it is the obligation of all names listed on the account.


What debts are discharged after you die?

In most cases, a person’s debts do not disappear after they die. Those debts are owing by the deceased person’s estate and are paid from it. Family members are not required by law to settle a deceased relative’s debts with their own money. If there is insufficient money in the estate to cover the debt, it is usually not paid.


Is family liable for a deceased debtor’s debt?

Contrary to common belief, a person’s debt and financial responsibilities do not die with him or her; nonetheless, Article 774 of the Civil Code of the Philippines states that the settling of debt and other financial obligations left by the deceased is assumed by his or her successors.

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When someone dies in South Africa, what happens to a financed car?

If the executor wishes to keep the car, we will work with the executor to settle the account with estate proceeds. If the estate lacks the funds to settle the amount, the executor may apply for car re-financing.


Are executors liable for debt?

When a person passes away, their debts become a liability on their estate. The executor of the estate, or the administrator if no will is left, is responsible for settling the estate’s outstanding debts.


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