The latter specifies that the estate left by the deceased has to be used to settle all his dues. So his entire bank balance, assets and property are to be used to this end first. But the liability can only be claimed as far as the estate can bear the burden. That means if the loan or credit dues outstanding are Rs 100,000 and the dead person's assets only amount to Rs 75,000, this amount will have to be utilised in settling the debts. The family is not personally liable.
Banks are usually willing to negotiate the amount that has to be settled.
You may take your lawyer along, if you wish.