Unsecured Personal Loan on Death

nrushforth

Looking for advice with regards an unsecured Personal Loan taken out by my father, who has recently passed away.

The loan is purely in his name with no guarantor.

What I need to know is who is liable for the debt now that he has passed away.

No Payment protection was taken out as he was too old, and he has no savings to pay off the loan.

Will it pass to the family or will it be written off.

Many Thanks

regularsaver1

form part of his estate i believe?

Bossyboots

It forms part of his estate and must be paid from that. If there is no or insufficient estate, the loan company will have to take the loss as it cannot be passed on to anyone else.

jonesMUFCforever

Agree with bossyboots.
Whoever is dealing with your father's estate needs to draft a simple letter to the bank stating exactly how much money your father left - deduct funeral costs from it and confirm that there is insufficent funds in the estate to cover the loan.
That should be the end of the matter.

nrushforth

Looking for additional advice. A letter has just arrived claiming the money from my Father's estate, almost 2 years after his death. At the time the paperwork was all filled in and I was informed (verbally) that nothing else would happen, i.e. the debt would be written off.

Now they are claiming that there was money in the estate, from the house, which was jointly owned by my father and his wife.

Can they claim the money from this, almost 2 years on, and is she liable for the debt, given that the loan was in his name only, no guarantor?

Are they trying it on?

Thanks

jonesMUFCforever

IMO no they are not.

Who signed the form to close his bank account off?
Presumably he had a half share of the house and this needed to be declared to the bank when advising them of the value of your father's estate.

If the house was owned as joint tenants then it would have gone to her on death, if it was tenants in common then the half of the house in his name was part of his estate on death.

I think you need to consult a solicitor for advice.

Oldernotwiser

Did you not tell them at the time that your father owned half a house when he died?

nrushforth

Not sure what my fathers wife advised when she closed his account.

She went through probate, so I assume it was all disclosed. The form from the solicitors claiming the original loan amount asked details of income, savings etc. As I recall it made no mention of property.

I think we will have to wait to see what the land search shows(the bacnk are conducting this now, presumably to find out how the property was owned)? If it was Joint Tenants, do they have a valid claim?

jonesMUFCforever

IANAL If the property was joint tenants (I still think you need to get this confirmed by a solicitor) then it would have automatically transferred to the wife on death. If this was the case it might be that this did not form part of his estate.
If the property was tenants in common it is almost certain that his half share should have been taken into account during the Grant of probate.

Ultimately it is the Executors who will have to sort this out. If wrong information was put on the probate forms they will have to pay back the loan as they are legally obliged to discharge debts and assets correctly.

For an estate to go through Probate would suggest that there must have been assets in the background.
I feel we have not been told the whole story here.

CLAPTON

As I see it

Debts have to be paid from the estate.

It used to be the case the joint tenants were not considered as part of the estate for debt purposes, but several court cases have over turned this interpretation and creditors can claim from the house value even in a joint tenancy.

For probate, joint tenancy doesn't form part of the estate for IHT purposes.

So valuations for probate and repaying debts are not the same thing.

Who was the executor?

More information needed here.

nrushforth

I'll try to get the full facts as I am recalling most of this from memory.

As to the probate I believe there was nothing in the estate and a full probate wasn't needed.