Repossession

What it means

A secured lender's right survives the borrower's death. If payments stop, the lender can generally repossess, subject to the loan agreement and state law.

For vehicles, many states allow repossession without a court order provided there is no breach of the peace. For a home, foreclosure is a court or statutory process and slower.

If the property sells for less than the debt, the lender may pursue the shortfall as a claim against the estate.

Why it matters

An estate frequently stops paying a car loan while everything is sorted out, and the car is gone before anybody decides whether to keep it.

Continuing payments during administration is often the cheaper decision, and it is a decision rather than a default.

When you are likely to meet it

• When a vehicle loan continues after a death.
• When a lender contacts the estate.
• When deciding whether to keep or surrender financed property.

How this varies by state

Whether a lender may repossess without a court order, what notice is required, and whether a deficiency may be pursued are all set by state law.

Related terms

• Certificate of titleThe state-issued document that proves who owns a vehicle — and whose issuing state decides the procedure after a death.
• Creditor claim periodThe window, set by state law, in which somebody owed money by the estate has to present the claim or lose it.
• Home Equity Conversion MortgageThe federally insured kind of reverse mortgage. What happens to the house after the borrower dies is set by its own rules.
• Insolvent estateAn estate that owes more than it holds. State law then decides who gets paid, in what order, and who gets nothing.
• LienA recorded claim against property, securing a debt, that has to be dealt with before the property can be transferred cleanly.
• Lien releaseA document from a lender confirming a loan is paid off, so the lien can be removed from a title.
• LienholderThe lender recorded on a vehicle's title as having a secured interest in it.
• Secured and unsecured debtWhether a debt is attached to a particular thing. It decides who has to be paid, in what order, and what happens if the estate cannot pay everyone.

Sahvelo guidance that uses this

• Debts after a death
• Inheriting a mortgaged home