Secured Loan Interest After Death

[NW_Biker]

Hi,

 

Just a quick question.

 

Is it legal for a company to continue to charge interest on a secured loan after the person who took it out has died and they have been informed of this?

 

Thanks in advance.

[renegadeimp]

Was there a guarantor? Is there any equity left in the property?

[NW_Biker]

Thanks for replying so quickly.

 

No, there was no guarantor. There probably isn't enough equity in the property to meet the outstanding mortgage. The secured loan was a second charge and was up to date at the time of death.

[NW_Biker]

I should also add that I asked a solicitor friend about this and she said that she thought that the account should have been crystallised as soon as they were informed of the death, but as this is not her specific area of law she said I should make further checks.

[unclebulgaria67]

Yes I would think it would be legal. I am trying to think why it would not be legal. It is a secured loan, so the debt is held against a property and the interest would be due up to the point the loan is paid off.

 

There is not much info online about this. One site suggests that interest should not be charged after the death notification is received on a sole named personal loan. But then says that it depends on the terms and conditions of the loan. So not very helpful.

 

If the loan was in one name, I would suggest that you seek clarification from the loan company about the law that they apply in this instance. Then perhaps check with National Debtline, who will have experts they can check this with and give you an answer.

[NW_Biker]

Thanks to you both for your prompt replies.

 

I too have searched online for clarification on this, but can't find anything.

 

I have read through the terms and conditions of the loan, but they don't mention anything about interest continuing after death.

[unclebulgaria67]

If it were definitely the case they could not charge interest after someones death, then this would be mentioned on every money related site on the internet. So it obviously does depend on the type of loan arrangement and the t&cs of the loan. I think you should ask the loan company about this and then seek clarfication about what they say. Money Advice Servive may also have info on this.

[NW_Biker]

Thanks.

 

I have contacted the Money Advice Service to see if they can shed any light on this matter.

 

I have just read through the terms and conditions of the loan and the only thing they say about death is that the loan becomes repayable in full upon death.

[citizenB]

You might also want to check if there is any Payment Protection Insurance on the loan !

[NW_Biker]

Thanks, but there is no PPI on the loan.