Personal debt wiped clean after death?

[kayb0y]

Well, here's my first post on this thread:

I'm not a lawyer, but I heard from a Real Estate instructor that if someone who owns a property and who takes out a personal or a home equity loan passes away without having paid off the loan does not pass on this debt to their heirs.

I must have heard this mistakenly because with mortgages and home equity loans, the bank can put liens on the property and the liens must be satisfied by future owners.

Am I correct?

If I'm mistaken, where does it state otherwise?

Perhaps it's with personal loans w/o collateral...
K.

[stan03]

If it is a home equity loan it is a lien on the house. If the owner of the house dies then the loan will be paid from the proceeds of the house sale. If the loan was a personal loan then the lender will seek to recover the money from the estate of the deceased person.

You are coorect that the debt does not pass to the heirs. The heirs are not liable for the loan. However, their inheritance may be less because the lender will recover the money from the assets of the deceased's estate.

[kayb0y]

wow, thanks for the quick reply.
now, that makes sense!
K.