It is not permissible to waive the diyah if the slain person was in debt
Question

                I have two question regarding same subject.But first I will tell you brief background.

Last week I lost my brother in a road accident, because of his death we got liability of 5 lakh loan (education loan which got from bank for his studies).

My question is that:

1. Can we ask compensation with the opposite person who hit my brother and caused to death.?

(As heard from the eye witnesses defaulter was the opposite person)

2. Can we utilize the insurance claim money from the insurance company in sadaqah-e- jariah of my brother and in further my sisters marriage.
Praise be to Allah.
    Firstly: 

    If a person strikes another and causes his death 
    unintentionally, he must do two things: pay the diyah and offer expiation, 
    because Allah says (interpretation of the meaning):

    “It is not for a believer to kill a believer except (that 
    it be) by mistake; and whosoever kills a believer by mistake, (it is 
    ordained that) he must set free a believing slave and a compensation (blood 
    money, i.e. Diya) be given to the deceased’s family unless they remit it”

    [al-Nisa’ 4:92]. 

    The diyah is one hundred camels, which is equivalent to 
    approximately one hundred thousand (100,000) riyals. 

    The expiation is fasting for two consecutive months. 

    The diyah for accidental killing is to be paid by the 
    killer’s male relatives on his father’s side. If he has no male relatives on 
    his father’s side, or they refuse to pay, then the killer must pay it.  

    The victim’s next-of-kin have the right to waive the diyah, 
    if they are adults and of sound mind, unless the victim was in debt, in 
    which case they do not have the right to waive it, rather they should take 
    the diyah and pay off the deceased’s debt from it first, then divide the 
    rest among his heirs. 

    Shaykh Ibn ‘Uthaymeen (may Allah have mercy on him) was 
    asked: Do the heirs of the victim have the right to waive the diyah when the 
    victim owes a debt? 

    He replied: They do not have the right to waive it, because 
    the rights of the heirs of the victim cannot be waived until after the debt 
    has been paid, because Allah says in the verse of inheritance 
    (interpretation of the meaning):

    “after payment of 
    legacies he (or she) may have bequeathed or debts”

    [al-Nisa’ 4:12]. 

    So they have no right to waive the diyah, because the diyah 
    is to be added to the estate. If we assume that he was killed and he had 
    fifty thousand, and the diyah is one hundred thousand, then his wealth is 
    one hundred and fifty thousand. 

    End quote from Liqa’ al-Baab al-Maftooh (123/22). 

    Secondly: 

    If the insurance company pays the diyah or compensation on 
    behalf of the killer, there is nothing wrong with you taking that from the 
    company, and after paying off your brother’s debts there is nothing wrong 
    with you donating the rest as an ongoing charity on his behalf or helping to 
    arrange your sister’s marriage. This diyah is to be added to the estate of 
    the deceased and shared out among his heirs after paying off his debt, as 
    stated above, and his heirs have the right to donate their shares if they 
    wish. 

    For more information please see the answer to questions no.
    70318 and
    52809. 

    And Allah knows best.