In the event of death who's liable for an unsecured loan balance?

[stuarto]

Good evenning.

 

I have a question which I hope someone can help me with. It's not a very pleasant subject but I'd like to find out as soon as possible.

 

In the event of a death while still having an unsecured loan (Black Horse) outstanding what happens to the balance still owed?

 

In this particular case the person concerned does not have life insurance or any savings to cover the £6000 balance.

 

Does their spouse become personally liable even though the loan was not in joint names?

 

I'd like to think it's written off - but I'm sure that's far too simple!

 

Thanks in advance of any replies.

 

Stuarto

[cerberusalert]

The Estate becomes liable not the spouse personally. If there are no personal assets or estate then the debt dies with the deceased.

[stuarto]

Thank you for the reply. Much appreciated.

 

Does the 'estate' include their home? (There's no mortgage attached to it).

 

And would your answer to my first question also apply to a car that was bought on hire purchase through a main dealer?

 

IE. if the vehicle is considered to be worth less than the outstanding balance - the car is handed back and the oustanding amount is written off?

 

Thanks again.

[cerberusalert]

Does the 'estate' include their home? (There's no mortgage attached to it).

If the house is solely in the spouse's name then it wouldn't be included in the estate.

And would your answer to my first question also apply to a car that was bought on hire purchase through a main dealer?

if it was in the deceased name then yes it should be handed back & if there was any shortfall the finance company would have to claim against the estate. Obviously if there were no estate the debt would have to be written off.

[stuarto]

Thanks for the reply.

 

Sorry - more queries. . .

 

So if the house is in both names, it is included in the 'estate'.

 

Does that mean therefore, that the two debts (unsecured loan and car loan) can be claimed against the value of the house and the spouse forced to sell or take out loans to pay the debts?

 

Thanks and sorry for the continuing questions. This is happening to my family at the moment and my Father is worrying about my Mother being left in debt (he isn't in a position to handle this himself).

 

Stuart.

[cerberusalert]

So if the house is in both names, it is included in the 'estate'.

The deceased half yes.

 

Does that mean therefore, that the two debts (unsecured loan and car loan) can be claimed against the value of the house and the spouse forced to sell or take out loans to pay the debts?

Theoretically yes although generally they would apply for a charging order for the debt to be paid if the property was sold. They would need a court order to be able to do it tho'.

 

Generally a creditor will wipe the debt when someone dies but there are some who will do a search of the land registry to see if they had any property interests.

[stuarto]

Thanks again. I will investigate further. I believe I need to find out how the house is owned - whether 'TENANTS IN COMMON' or JOINT TENANTS', is that correct?

 

Stuart.

[Guest]

some info for eg

http://www.nationaldebtline.co.uk/england_wales/factsheet.php?page=21_what_to_do_about_debt_when_someone_dies

also check the agreement concerned as this may say something re death

Edited November 30, 2011 by Ford

[cerberusalert]

That's right, but I'm not certain which one can affect a creditors claim. IIRC if it's a Tenants in Common the property can be sold, whereas if it's a Joint Tenancy it can't.

 

Hopefully someone more knowledgeable will clarify.

[Gaston Grimsdyke]

If it's a joint tenancy the deceased's half will pass automatically to the survivor free of debts. If it's a tenancy in common, then the deceased's share goes into the estate and is an asset for the benefit of the creditors.

[stuarto]

My Mother has just received a letter from Black Horse asking about the loan that my later Father had (mentioned in my original post back in November).

 

They were informed of his passing back in January and agreed to put the loan payments on hold for 3 months.

 

Now they seem to back on the case in terms of paying off the loan.

 

There is no estate to be able to pay the loan back.

 

They family home was owned as 'Joint Tenants' therefore now belongs to my Mother (so not included in my Father's estate).

 

I thought the debt would then be 'written off' (as some have suggested here and elsewhere).

 

BUT, I have just looked on the 'direct.gov.uk' website and found this regarding any oustanding debts:

 

Joint Tenants

...But even though it's now in your estate, you can't ignore the debts. Creditors can apply for an Insolvency Administration Order' within five years of the death. This can have the effect of dividing the property in two and can force a sale. So it's in your interest to try and come to an agreement with people wo are owed money, and try to pay them yourself.

 

So now I'm worried that it's possible my Mother WILL have to find the money from somewhere.

 

Is this really the case? Does anyone have any experience of a loan company going to these lengths.

 

Thanks in advance of any replies/advice/observations.

 

Stu

[sillygirl1]

I would get your local MP involved here, there is no cause really for Black Horse to take the route, they are trying it on and KNOW the rules better than yourself.

 

It might be worth getting a solicitor who specialises in this area to write a shirty letter to them.

 

If your mother is a pensioner then they have even more cause to back off.

[stuarto]

Thanks for your reply.

 

Since my Father's passing all matters have been dealt with by my brother and myself.

 

I think you're right - we should involve a solicitor and will consider writing to her local MP if necessary.

 

And yes, my Mother is a pensioner (71 years old). Married for 51 years and only ever spent one week apart, so currently going through a very tough time grieving her loss. My Father was diagnosed with stomach cancer last July and passed away on Christmas Eve - a period of time which I will never ever forget. Anyway, sorry to ramble and thanks again for your reply.

 

Stuart.

[cerberusalert]

Was there any PPI with this loan and have they added any unfair charges over the loan period?

 

If so they should be reclaimed + statutory interest which would reduce the alleged debt anyway.