Widowed Mum has paid off my Dad's credit card debts .... did she need to?

Chicken_Licken

My Father passed away fairly suddenly in August 2004 owing approx £35,000 on various credit cards and an unsecured personal loan.

All credit card agreements and the loan agreement were solely in my Father's name. On obtaining his death certificate my Mum contacted all of his creditors and informed them of the situation.

All the creditors then asked for the debit balances to be settled which my Mum promptly did using a 'death in service' payment she received directly to herself from his employers.

I now realise that my Mum may not have needed to do this. The house was under a joint mortgage which automatically passed to my Mum on my Father's death and as such my Father had no other 'assets' to leave my Mother or myself. I believe the 'death in service' payment she received is regarded as hers and not part of my Father's estate.

She also had an endowment policy on their mortgage which fell short of about £1500 which she also paid out of the 'death in service' payment.

I have mentioned to her that she may not have needed to pay off my Father's debts but she is very sceptical that this is the case and even if it isn't she is resigned to the fact that she will never get the money back from his creditors.

I have read Desparate Annie's postings and I wish her the best of luck with her situation and contact with the CAB. I am urging my Mother to contact them but she is reluctant to do as I think she just doesn't have the strength to fight anymore.

If anyone has any advice to give or words of encouragement I'd really appreciate it.

creditcardking_2

No need to pay the debts however the creditors would be entitled to claim the money owed from his share of the house, not sure if they could have forced a sale though.

Chicken_Licken

I'm becoming more and more convinced that she wouldn't have had to pay the debts off but as you say I'm unsure about the house situation. However, I have been told that as it went directly to her on his death it was therefore her asset and not his or part of estate. Will wait to see what the CAB advises.

Many thanks

Chicken_Licken

By the way can you make a claim for compensation on a failed endowment policy after it has been closed or your mortgage has been repiad?

lixi

Chicken Licken,

I posted in Desperate Annie's thread but I will repost here for your ease of reference.

Have a look at the website below. As I have explained before, if your mum and dad owned the property as joint tenants, that just means that your dad's legal share of the house passed to the other joint tenant (your mum) on his death. This is what is known as automatic survivorship in the legal world. (It often isn't as simple as that though, the simplest actions can give rise to claims for constructive trusts etc. Legal rights don't necessarily mean the same thing as beneficial rights. Whilst the land registry may say something is owned by one person, it is often the case that another is entitled to it, but anyway, I digress).

However, your mum was wise to apply the funds she had paid to her against your dad's debts. The guidance from the website below confirms that in the case of the death of a joint tenant, creditors can apply for an ‘Insolvency Administration Order’ within five years of the death. The website says that this can have the effect of dividing the property in two and forcing a sale. Have a look at the other website I have dug out for you below. This gives more detailed guidance which indicates that an order for sale cannot be made as such, but in practical terms, this doesn't offer much comfort as the remaining joint tenant can be pursued for the debt personally and if the amount sought isn't recouped, there are various methods of enforcement open to them, such as a charging order against the home in question and so in. So not much difference there then in fact.

So it’s in your interest to try to come to an agreement with people who are owed money, and try to pay them yourself. Otherwise you run the risk of losing the house.

http://www.direct.gov.uk/MoneyTaxAndBenefits/ManagingDebt/DebtsAndArrears/DebtsAndArrearsArticles/fs/en?CONTENT_ID=10013093&chk=GeJ8kQ


http://www.insolvency.gov.uk/freedomofinformation/technical/casehelpmanual/Deceased%20Insolvents/DeceasedInsolvents.htm

exil

OK - assume a house isn't involved (the house was rented). Are you obliged to pay the debts of a deceased relative - say those of a parent?

becky004

When my mum died we had to pay all her debts, even small catalogue bills and HP agreements for furniture. It was a nightmare.

We sent of death certificate etc but with the catalogue in particular I was expected to pay it out of my wages!

Chicken_Licken

Thank you soo much Lixi, looks like my Mum has possibly done the right thing after all! I'm sure she'd want the security of the home her and my Dad shared together above anything else.

The links have proved very helpful (have printed off the info to have a proper read) and your post has really clarified things.

Do you know if she has any right to claim for misselling of the endownment even though it's now a closed policy?

Have briefly looked on the Endowment Action website Martin recommended but couldn't see anything about policies that were no longer active.

exil

Not sure I understand the situation yet. A company is owed money by your Mum, say. She dies. They send letters pursuing the debt. No one answers (you, her closest relative, live in Australia and returned after the funeral). Your mum had no house, no life insurance and no savings - so there was no legacy from which debts could be paid. Who do the company come after for the debt?

That is - I can understand that debtors can take money from a legacy, before any surplus goes to relatives - but what if there isn't one? Can you become liable personally if your uncle, say, was a gambling addict and died owing half a million?

calleyw

exil wrote:

Not sure I understand the situation yet. A company is owed money by your Mum, say. She dies. They send letters pursuing the debt. No one answers (you, her closest relative, live in Australia and returned after the funeral). Your mum had no house, no life insurance and no savings - so there was no legacy from which debts could be paid. Who do the company come after for the debt?

That is - I can understand that debtors can take money from a legacy, before any surplus goes to relatives - but what if there isn't one? Can you become liable personally if your uncle, say, was a gambling addict and died owing half a million?

As far as I was aware if there are no assets there is no estate if no estate then the companies can't have any money as there is no money to have.

They may try chasing who every informs them of the death but you don't owe them nothing.

Bascially they can only have what you have. And as that is nothing that is all they get.


Yours

Calley

chudies

as others have said, credit card debt is the ONLY debt that does not need to be repaid upon death.

mortgage, unsecured loans, as far as i know need to be paid, as they are allowed to courts, and will more than likely win judgement for debt owed