Help your dependants manage your liabilities in case of illness, death

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Illness and bereavement test our emotional strength. The last thing we think of in such circumstances is managing finances. It is, however, important to manage any credit obligations of the affected person. Here is how you can better manage the credit commitments in the case of illness or bereavement.

WHEN SOMEONE IS ILL

When someone is seriously ill, he or she may not be able to keep up credit repayments. Let's us take the case of Ramesh (this is only a scenario). Ramesh suffered a paralysis stroke and was bed-ridden for a long time. It was a difficult time for his wife Radha.

Ramesh, who had an outstanding on a car loan and credit cards, defaulted on his repayments due to the illness. Radha started receiving calls from the bank's collections department. Radha's brother Gopal offered to help. He immediately arranged for a power of attorney for Ramesh. This allowed Gopal to take care of Ramesh's finances during the illness.

Gopal immediately ensured that the medical insurance company began settling the hospital bills through the cashless facility that Ramesh had opted for. Gopal then applied for a copy of Ramesh's credit information report (CIR) from a credit information company (CIC). A CIC can send a copy of another person's CIR only if you send them a copy of your power of attorney.

The CIR showed Gopal the details of Ramesh's credit accounts and he contacted the banks concerned and informed them about the situation. The banks were sensitive towards the situation and Gopal was able to agree on mutually acceptable arrangements for the repayments.

After six months, Ramesh recuperated from his illness and resumed work and resumed the repayments of his loans and credit card dues. The actions taken by Gopal enabled Ramesh to manage his credit obligations well and maintain a good credit history.

CREDIT HISTORY

Everything about it: Banks and NBFCs provide a record of your loan and credit card repayments to credit information companies (CIC) such as Experian. A CIC is an independent organisation that compiles public data, identity information, credit transactions and payment histories of consumers. When you apply for a loan, banks have to make sure that you are who you say you are and that you are likely to repay the loan. They will look at the information in your application and will check your credit report from a CIC.

The Experian Credit Report contains identity information, past and present credit obligations, previous addresses and enquiries made by banks for all your loan applications. If your report shows that you repay credit on time, this will usually help you get credit at favourable terms. Thus, it is important to maintain a good credit history.

WHEN THERE IS BEREAVEMENT

When there is bereavement, a lot of trouble can be saved if you contact any lenders the deceased had accounts with and explain to them that you will be in touch later to find out what you need to do. It is important that you get the deceased person's CIR by submitting a power of attorney or proof that you are the executor of the person's will.

 Once you have received the CIR, you can send a copy of the death certificate to Experian or any other CIC and they will contact the relevant lenders to ask them to update their records. Some lenders might ask you to contact them directly.

PREVENT IDENTITY FRAUD

Fraudsters may use the identities of dead people to apply for credit. You can reduce the chances of this happening by:

1) Making sure all existing credit accounts are closed

2) Returning key documents such as passport, driving licence, PAN card, etc, to the organisations that issued them

3) Arranging to remove the person's name from the electoral roll (voters list)

Make it easy for your loved ones

We would all like to be well organised, but our busy routine often gets in the way. It is when tragedy strikes that the real value of keeping good records becomes clear. Ramesh didn't want to let his illness or death cause even more distress to Radha. He made it easier for his loved ones by:

1) Writing a clear will with the help of a solicitor, making it easier for the people he trusted to act as executors to carry out his wishes

2) Regularly getting a copy of his CIR and keeping it along with an updated list of all his financial commitments, making it easier to sort things out for him and ensuring that his lenders knew about any eventuality

3) Arranging a power of attorney so that Gopal and Radha could manage his financial matters in case of his illness or death

4) Getting credit insurance to cover his liabilities in the event of permanent disability or death

Ramesh has persuaded his family and friends to put things in order. So when are you going to do it?

Source: Economic Times

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