Legal Q&A 8: How to collect debt when the debtor is deceased?

Borrowing property is one of the common civil transactions. Borrowing seems to be simple, but there are many potential risks. The borrower unfortunately passing away without completing the repayment is one of them. Then how can the lender legally collect the debt? Is there any risk of losing all the borrowed property?

Let’s learn about this topic with PL & Partners Law Firm by answering the below inquiry.

The question is as follows:

“Hello lawyer.

One year ago, my family lent Mr. B 500 million Vietnamese dongs. We signed all the loan documents.

Up to the present, Mr. B has only paid 200 million Vietnamese dongs. However, a month ago, Mr. B had an accident and then suddenly passed away.

My family is very confused, we don’t know if we can take back the remaining amount of 300 million Vietnamese dongs or not and how to legally collect the debt. Who will pay this debt for Mr. B?

We hope to receive advice from the lawyer.”

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Thank you for submitting your inquiry to PL & Partners Law Firm.

Regarding your concern, as the provided information is not enough for us to analyze the case, we suppose that:

The loan transaction between You and Mr. B has all valid papers and documents showing that this loan transaction exists and the parties have completed the delivery and receipt of money;
There is NO guarantor on the loan.

Then there are two possible cases:

1. CASE 1: MR. B HAS DIED AND LEFT THE ESTATE TO HIS HEIRS.

At this time, Mr. B’s estate will be distributed according to the will or the law (if there is no will or the will is illegal).

Article 615 of the Civil Code stipulates that: “The heirs are responsible for performing property obligations within the scope of the estate left by the decedent, unless otherwise agreed.”

“In case the estate has not been distributed, the property obligations left by the deceased shall be performed by the administrator of the estate within the scope of the estate according to the agreement of the heirs.”

“In case the estate has been distributed, each heir shall perform the property obligations left by the deceased in proportion to but not exceeding the inheritance he/she has received, unless otherwise agreed.”

Thus, in this case, You have the right to require Mr. B’s heirs to repay you within the scope of the inheritance they received from Mr. B.

However, you should note that the law stipulates the order of priority for payment related to estate as follows:

Funeral costs.
Missing alimony.
Expenses for estate
Subsidies for dependents.
Wages for employees.
Damages.
Taxes and other payables to the state budget.
Debts

Debt payment is in the 8th position. This means Mr. B’s estate will be used to pay in orders from 1 to 7. After paying for these 07 items, the heir will have to use the remaining estate to pay you (if any). The obligation to repay the debt cannot exceed the inheritance they received.

For example:

Mr. B’s estate has a total value of 600 million Vietnamese dongs. After completing the payment for 07 items in order of 400 million Vietnamese dongs, the remaining value is 200 million Vietnamese dongs. In that case, you have the right to request Mr. B’s heirs to repay you.

Mr. B still owes you 300 million Vietnamese dongs, but the remaining estate after paying for items 1 to 7 is only 200 million Vietnamese dongs. In that case, the heir will only have to pay you 200 million Vietnamese dongs without the obligation to pay the excess.

2. CASE 2: MR. B HAS DIED BUT LEFT NO ESTATE TO HIS HEIRS.

In this case, the risk is entirely yours because there is no basis to collect debt or require others to repay you. At that time, legally, it will be difficult for you to get your 300 million Vietnamese dongs back.

Thus, we have answered an inquiry from a reader about how to collect debt legally if the debtor is deceased.