Dad died leaving debts. Is mum liable????

troub

Hi I wonder if anyone can advise me. My dad was ill for a long time and accrued debts, some in his name, some in mums. She has the house with a small mortgage which is now hers. The company that negotiated reduced payments with their creditors sent out death certs and told mum dads debts would now probably be wiped as her state pension in miniscule and she still has debts of her own. They then also said that regards dads debt she was on her own, they wouldn't help.
However the bank to whom dads biggest loan 10K has written to mum wanting to know about her estate. She has the house, but no cash, debts and little income.
She is worried that they will demand she sells up to pay the debts or go after her for them. She is 70 and the equity is small, so she couldn't buy another house.
I have got to write a letter in answer to their request and need to word it carefully. There is a will but we didn't need to do anything with it as the house was simply transferred into mums name.
Any ideas????

immoral_angeluk

She is only liable for debts in either her sole name, or joint names with your dad. Any debts solely in his name will be written off if there is not enough estate to cover them.

Edit: Unless she was a guarantor...

GeorgeUK

Sorry for your loss.

I can't really advise on this but if you have any queries i think calling the nationaldebtline should allow you to clarify some of the things to put in the letter. This link may also help.
http://direct.gov.uk/en/MoneyTaxAndBenefits/ManagingDebt/DebtsAndArrears/DG_10013093

[Deleted User]

I also cannot advise on this issue but am bumping the thread so the experts will see it! Good luck x

debtdesperado

If it turns out that your mum is liable for some of the debts, a solution might be for her to default and then negotiate with the lenders that they would get a charge over the house. This would mean that although they couldn't force a sale, when your mum passes, they would be repaid out of the proceeds.

This would obviously mean that you would inherit less, but it would be a better solution than your mum being stressed about making repayments or declaring bankruptcy which may mean the lenders could force the sale of the house.

It might be worth asking the national debtline what they think about suggesting this to the lenders for your mum's debts?

Norfolk_Jim

Specifically the 10,000 Bank loan.
Unless it is in her name, joint names or secured on the house then the bank will have to take the loss. You will need to provide some details of his estate (whatever he left behind) but bear in mind that the priority claim on any estate is the reasonable costs of a basic (that is, not lavish) funeral.
When my dad died a couple of years back, most creditors simply accepted the death certificate and a signed statement that the estate was insufficient to cover funeral costs and no funds were available to distribute to unsecured creditors. One would not accept that and I had to apply for a deed of probate. The probate form will specify the ammount of the estate - in my dads case nil pounds. It was a fuss but not hard to obtain, you go in an office in the court, fill in a form, take an oath and its done, 10 mins.
If its more complicated than that - such as the debt is secured on the house - seek proper legal advice. CAB is a good place to start.

Tixy

If there is equity in the house then that (or possibly half that) would form part of the estate. Therefore the creditors have a right to whatever is left after funeral expenses but before any remainder is distributed according to his will (presumably to his wife in this case).

System

Tixy wrote: »

If there is equity in the house then that (or possibly half that) would form part of the estate.

Surely that would depend on whether it was held as joint tenants or tenants in common?

RAS

!!!!!! wrote: »

Surely that would depend on whether it was held as joint tenants or tenants in common?

Hopefuly since he has been ill a long time, that problem was sorted out. Chances are mum owns the house.