Help needed, father passed away leaving a loan to repay

[jimbob1978]

Hey guys, im new and have been reading through the brilliant info on the site,

 

I need a little advice...

 

My father recently passed away and had an unsecured personal loan, does this need to be paid back by my mother?

 

I rang the loan company and advised them of my fathers death, i have also sent them the death certificate, this morning i recieved a letter advising me that the outstanding balance needed to be repaid?

 

With regards to my fathers "estate" ... the house, which my mum still lives in was jointly owned, her car is in her name, all bank accounts were in joint names and to the best of my knowledge the savings they had were a few thousand in a joint savings account.

 

Can anyone advise where my mother (next of kin) stands?

 

cheers,

[AndyOrch]

When an individual dies and still owes money in debts, these amounts must be covered by the deceased’s estate. Insurance policies may be enough to pay off some debts, so always check to see if the deceased held death cover for a mortgage or some sort of payment protection cover for personal loans and/or credit card debt. Some of the debts that may need to be covered include water rates, Council Tax, utility bills, outstanding amounts on hire purchase agreements, tax debts and possibly even mortgages. Personal loans, credit card debt and other personal debts will need to be paid off by the estate as well, and if total debts can not be covered by insurance money and cash then property and personal possessions may need to be sold. If these items are sold for higher than the market value, tax may be due from the sale as well. If there is not enough value in the deceased’s estate to cover his or her debts, the debts will not necessarily pass on to a spouse or family member unless another individual was involved in joint loan with or guaranteed a loan for the deceased.

 

The Estate

 

When an individual dies, all of their assets (including money, property, shares and insurance payouts) are bundled together and valued as one. This collection is known as the person’s estate. When an individual makes a will, they will name someone to take charge of their affairs after their death. This person is called an ‘executor’. If, on the other hand, they have died intestate (that is, without a will), then an ‘administrator’ is appointed to carry out the same duties. The first task facing this individual, after having valued the estate, is to begin to pay off any outstanding debts from the estate.

 

 

In paying off these outstanding debts, the executor or administrator must ensure that they repay the deceased individual’s creditors in a certain order. Mortgages must be paid off first, followed by rent arrears; water rates; council tax; fuel; personal loans and credit cards; and finally debts to the Exchequer such as outstanding tax or overpaid benefits.

It is often thought that a surviving spouse or civil partner will automatically ‘inherit’ the deceased individual’s debts, but this is not necessarily the case. Nothing will be paid to the beneficiaries of the will until all of the debts have been cleared, but there are only certain circumstances in which a partner would be liable for these debts. The most common of these is if you were to have a loan in a joint name (that is, your partner’s and your own), or if you acted as a guarantor against a loan taken out in the deceased person’s name. In these circumstances, the responsibility for paying back the money is passed to you.

 

Housing

 

If there is not enough money in the estate to pay off the outstanding debts, and you jointly owned a house with the deceased individual, there is a chance that you may be forced into selling the property in order to satisfy the creditors. Your course of action in these circumstances depends on the legal position of your tenancy; if you were tenants in common (that is, each of you owned a specific share in the property) then debts will first be paid from the deceased person’s portion of the house.

 

However, you are likely to have to negotiate with the creditors in order to avoid the forced sale of your portion. If, on the other hand, you were joint tenants (that is, you owned the entire property together), the deceased person’s portion will pass directly to you. However, creditors can still attempt to force the sale of the property through an Insolvency Administration Order, and so you would almost certainly be best off trying to negotiate a payment plan with those who are owed money.

 

Regards

 

Andy

Edited May 18, 2010 by Andyorch

[banker_rhymes_with]

Hello Andy!

 

It would be interesting for many I think to also consider what happens in the event that Debts are disputed, or were disputed prior to Death.

 

The above assumes (and no disrespect intended by saying this), that the Debts are all 100% above board and had/have no enforceability issues.

 

That subject is one for another Thread, but I thought I'd mention it in case there were any issues with the above Loan.

 

For example, I assume the Executor has a Right to see evidence that a Debt is valid, such as, say, sight of a properly executed Regulated Credit Agreement if the Loan was Regulated.

 

I assume s77(1) no longer applies once the Consumer has passed away. Does the Loan Agreement self-terminate upon the Death?

 

Cheers,

BRW

[AndyOrch]

Absolutely Banker

 

The above is a perfect world and all is above board.However the Caggers know there may be a few Gremlins to iron were as an Executor would not.

Hope alls well in your world Banker long time not chat.

 

 

I assume s77(1) no longer applies once the Consumer has passed away. Does the Loan Agreement self-terminate upon the Death? Not exactly but becomes liable on the estate if their are funds to settle and would also take its rightful priority

 

Regards

 

Andy

[banker_rhymes_with]

Hello Andy!

 

Hope all is well with you...I'm still fighting the usual battles!

 

Not exactly but becomes liable on the estate if their are funds to settle and would also take its rightful priority

Any idea, i.e. from the other perspective, what Rights the Executor has to establish if the Debt is enforceable?

 

Say, taking the above unsecured Loan as the example, the Loan Company may say they are owed the balance from the Estate, but I would think the Executor has a duty not to pay money from the Estate if it is not actually due.

 

So, is it simply the case that the Executor can demand that the Loan Company produce the Agreement. Likewise, if the Executor is not impressed by what he sees, then I would think he can tell the Loan Company to bog off.

 

However, the Loan Company I should imagine could play difficult, in which case I would imagine that Probate could be delayed if they pitch in to say they are a Creditor on the Estate, and must be paid.

 

If they really won't back down, then am I right in saying this would need to be settled in Court? In which case, the Executor is in a difficult position, because there may not be cash to pay for a Claim against the Loan Company, and not enough time if the grant of Probate is important, to wait for the Loan Company to take the Estate to Court to seek payment.

 

Just investigating the issues, to see what options Jimbob1978 has if he thinks the Loan Agreement is fishy.

 

Cheers,

BRW

[AndyOrch]

Hello Andy!

 

Hope all is well with you...I'm still fighting the usual battles!

 

Any idea, i.e. from the other perspective, what Rights the Executor has to establish if the Debt is enforceable? He as all the rights as he is acting on the deceased will

 

Say, taking the above unsecured Loan as the example, the Loan Company may say they are owed the balance from the Estate, but I would think the Executor has a duty not to pay money from the Estate if it is not actually due. True if there is a dispute with said debt he/she has the right to challenge it.

 

So, is it simply the case that the Executor can demand that the Loan Company produce the Agreement. Likewise, if the Executor is not impressed by what he sees, then I would think he can tell the Loan Company to bog off. Correct

 

However, the Loan Company I should imagine could play difficult, in which case I would imagine that Probate could be delayed if they pitch in to say they are a Creditor on the Estate, and must be paid.Dont they allows dead or alive

 

If they really won't back down, then am I right in saying this would need to be settled in Court? very doubtful as a summons would have to be issued against the deceased and not the executor In which case, the Executor is in a difficult position, because there may not be cash to pay for a Claim against the Loan Company, and not enough time if the grant of Probate is important, to wait for the Loan Company to take the Estate to Court to seek payment.They would back down before that point especially if there are not enough funds within the estate anyway.

 

Just investigating the issues, to see what options Jimbob1978 has if he thinks the Loan Agreement is fishy. Not a problem Banker does raise interesting issues

Cheers,

BRW

 

I wish you well with your ongoing endeavors

Regards

Andy