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Nerdy Note: Do debts die with you?

in MoneySaving polls
35 replies 25.5K views


  • peteruddpeterudd Forumite
    9 Posts
    I was happy to settle my late mum's bill with the milkman, especially as Nectar transfered 28,000 Sainsbury's points without question.:T
  • Can someone advise me on this. My husband passed away last year and like what was posted, his debts that were just in his name alone did die with him because he owed more than his assets, but my question is, we had one loan that was in joint names - am I liable for the full amount of the loan now or only half, as half was his?
  • trudijtrudij Forumite
    1.9K Posts
    Part of the Furniture Combo Breaker
    As I understand it,I think that woudl be all for you to repay - it was in both names,so you are as liable for it as your late husband was.
    Do not meddle in the affairs of dragons, for you are crunchy and taste good with ketchup
  • Did you buy the house from him for the full market value?
    If so, I can't see that you have a problem.

    [Though I'm not sure what he did with the money to then need a bank loan!]

    Does he pay you full market rent to live there?

    I did not pay full market value, not by a long shot. I paid off his and my nan's equity release loan so he received no extra cash from me. And no, he is not charged rent!!!!! Its the old rule of surving 7 years a gift of deed and all that,the law sees that he has given his shackels away as if the house had been sold, he would have received at that time £200k from the proceeds.
  • JimmyTheWigJimmyTheWig Forumite
    12.2K Posts
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    Yes, I would have thought the 7 year business would come in to play. I mean surely you can't take out loads of loans, give the money away (in effect this is what he has done, as if you had paid full market rate he wouldn't have needed the loan) then die and get the loans written off.

    And yes, as I am sure you know, if he dies within 7 years of the gift then that gift is subject to inheritance tax.
  • dzug1dzug1 Forumite
    13.5K Posts
    10,000 Posts Combo Breaker
    Can you choose what you pay off with your assets first? E.g.
    Assets: 50k
    Personal debt: 50k
    Joint debt: 50k

    Can you choose that your assets go towards the joint debt, then the personal debt dies with you?
    Or does it have to be split pro-rata?
    Or is there some other way of working it out?

    There is a 'pecking order' for debts, which is :

    secured debts - eg mortgage

    privileged debts - eg funeral expenses, admin costs of probate, wages owed to employees, some types of tax

    ordinary debts - everything else

    So no you can't choose the order
  • JimmyTheWigJimmyTheWig Forumite
    12.2K Posts
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    Thanks, dzug1.
    What about an order within that pecking order? E.g. if you still had assets left after clearing your secured debts and your privileged debts, but not enough to cover all your ordinary debts and you had a loan in your name and a loan in joint names?
    (Only asking out of interest, btw)
  • suemkaysuemkay Forumite
    4 Posts
    Part of the Furniture Combo Breaker
    Our 24 year old son passed away suddenly just before last Christmas. He lived at home and therefore had not personal assets. His bank and credit card both wrote off his debt. However, he had an x-box from Littlewoods which he was paying for monthly and had taken out the premium insurance. Unfortunately, he had missed a payment just before he passed away and Littlewoods have been badgering us for the money ever since. We have received letters from a solicitor saying that Littlewoods will accept payment from us (each letter has said a different amount). My husband spoke to someone at the solicitors, refusing to pay the money as our son had no assets, who said that she would conduct a search to make sure that he did not own any property or have life assurance. We have just received another letter giving an amount that their client, Littlewoods, will accept in settlement. Are we liable for this debt? Thanks for any help,
  • JimmyTheWigJimmyTheWig Forumite
    12.2K Posts
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    Sorry to hear about your son.

    Would they count the x-box as an asset?

    From what has been said, you are in no way liable for this debt.
    But if he had been paying it off and they are happy to accept a reduced figure in settlement, would it be easier for you to pay this in this difficult time?
    (I'm not saying yes or no, just asking the question. I don't know how easy it would be for you to pay this. But I can also see that you wouldn't want them snooping around right now.)
  • i think anything apart from secured loans (mortgage / car HP etc) would get written off, after a few attempts to get paymetn from the estate.

    ytility bills etc though may be treated different- the surviving family may get cut off, if they dont carry on paying?
    Long time away from MSE, been dealing real life stuff..
    Sometimes seen lurking on the compers forum :-)
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