Legal Question in Credit and Debt Law in Pennsylvania

Auto Loan - After Death

My father-in-law had an auto loan that he made only 16 payments on before he died and had no will. Both he and his wife were named on the residence where they lived but only his name was on the loan. His wife then died 5 weeks later and had a will leaving the estate to her three children. The car is in great shape but none of the children would like the car. The value of the car is less than the balance of the loan.

I have two Questions:

1. At this point can we just give the car to the lender?

Or

2. Arethe children now responsible for the outstanding balance on the car loan?

If this answer is no to Question #1, my follow up question would be:

If my father-in-law had stopped payment on the loan before he died, the loan institution would just repossess the car and a lean most likely would not be placed on the estate. Why is it different after he dies?

Any help in the matter would be appreciated.

Thanks in Advance


Asked on 7/19/07, 12:07 pm

1 Answer from Attorneys
John Gibson John W. Gibson, Esquire

Re: Auto Loan - After Death

Last part first. It isn't any different after death. If he stopped paying on the car during his lifetime, the bank or other lender would sell the car at auction and would sue for a deficiency or the difference between the price at auction and the remaining balance. A judicial lien would be placed against either him or the estate.

As to the rest of the question, the children would not be liable for the deficiency but his estate would. If there are no assets in his estate the lender is out of luck. If the home was held jointly with right of survivorship it passed to your mother-in-law on your father-in-law's death by operation of law and would be given to the children by her will.

However, if the car is in great shape and there were a number of payments made on it, you may want to see if you can sell it for more than the balance of the loan or simply give it back to the dealer.

Read more
Answered on 7/20/07, 10:16 am


Related Questions & Answers

More Credit, Debt and Collections Law questions and answers in Pennsylvania