1. The advocate whom your client consultant is himself not aware of many things.

2. It’s a common phenomenon that after the borrower’s death, the creditor recovers his dues from the assets the borrower has left behind.

Married Women's Property Act, 1874 (MWP Act) was created to protect the properties owned by women from relatives, creditors and even from their own husbands.

Indian law, under the Married Women’s Property (MWP) Act, 1874, allows one to create a fence to protect his family from his personal debt as this query is all about that (prevention).

Below are the only prevention available to wife aprehension mentioned in the query

3. S. 6 of the MWP Act allows an individual to buy a policy for himself under the Act and create a trust for the same. This policy is free from creditors, court attachments and creditors would not form part of his estate. However, the law also explicitly states that if the policy has been effected with an intention to defraud creditors, these laws would not operate to destroy or impede the rights of any creditor to be paid out of the proceeds of the policy.

In this policy, the policyholder (the husband) loses all control over the policy with the exception of paying premiums and the policy becomes a property of his wife in the form of a trust where the beneficiary of the trust is only his wife and children. Thus, even if the husband dies before clearing all his debt, still the creditors would not be able to claim the funds from this policy as the policy from the very first day is the property of a trust and not his personal estate. In case the husband has not appointed any trustees, the estate shall be transferred to the Official Trustee of the State.

4. Any married man can take a life insurance policy under MWP Act. This includes divorced persons and widowers. The policy can be taken only on one's own name, i.e., the life assured has to be the proposer himself. Any type of plan can be endorsed to be covered under MWP Act.

Also in case of a death claim, the policy proceeds are received by the trust and cannot be claimed by the debtors nor will it form part of the estate of the proposer. Hence, the welfare the wife/child/children are protected with utmost care.

Remedy:

Hence suggest your client to encourage her drinking or whatever vice filled husband to opt for buying above stated policy. After his unnatural death your female client and her children will be safe from any legal claims from any debtors.

Wife not responsible for husband’s debts, says HC

The Karnataka High Court has ruled that wife or other relatives cannot be held responsible for the debts of husband or others.

In a writ petition filed by K P Santhosh Kumar against Standard Chartered Bank, his wife Sunanda had appeared before the Lok Adalat and signed the compromise in respect of a loan obtained by Santhosh Kumar.

As per the compromise the wife had paid Rs 1.61 lakh and failed to remit Rs 23,000.
For failure of not paying Rs 23,000, the bank took a warrant for the attachment of movable assets.

The Court observed that there was nothing on record to show that the wife of the petitioner had represented him as general power of attorney (GPA) holder and or appeared before the Adalat as a GPA holder of the petitioner or as a co-obligant of the petitioner.

The Court, hence, ruled that the petitioner’s wife could not be signatory to the compromise said to have been arrived at before the Lok Adalat. “Even if the wife has signed it, the Adalat should not have accepted her petition filed for settlement,” the Court ruled.

In another case before Additional Consumer Forum IV at Bangalore, it was held that the bank cannot exercise right of set off and bankers general lien (right of the creditor to retain assets until the debt is paid, unless there is contract) on joint account held by the husband and wife for the debt of husband.

In a case between Usha Saraswathi v/s HDFC Bank Ltd the Court found that the bank cannot recover or force the wife of the borrower to pay the amount due to them. Usha Saraswthi, who is running a provision and general store at Nagarbhavi Ring Road, was harassed by the recovery agents when her husband defaulted on the personal loan.

The recovery agents forcibly recovered one monthly installment of Rs 10,848 and started harassing her to pay the balance EMIs repeatedly. She filed a suit for permanent injunction against the defendants.

The Court observed: “If really there is a due or balance of loan amount, it is for the defendants to recover the said amount with due process of law.” It further observed the wife was not a party to the loan transactions taken between the defendants and her husband, nor was she the guarantor for the loan.

The Court restrained the bank and the recovery agents from harassing them or trying to reclaim the amount from the wife. C V Giddappa, General Secretary, Credit Card Holders Association, said the three judgements confirmed that the wife was not responsible for the debts of her husband. Stating that they received several complaints, he said they were already in the process of filing civil and criminal charges against the banks.