deceased father in laws loan

atb

My father in law had a loan with Clydesdale bank. The amount outstanding was around £9000. My mother in law was also named on the loan.

Upon his death, my wife contacted the bank who advised that we would be willing to continue to ensure the bank received the full monthly payments on an ongoing basis until the loan was cleared.

The bank flatly refused and advised that they would seek to attain the full amount from the estate, in which my mother in law now resides alone. There is not enough money in estate to settle the amount in full

I really don't understand. Surely the bank whilst entitled to the amount do have a duty of care in these situations??

They are still going to get the money they are owed. Why do they insist on taking legal action to retrieve the money which could result in my mother in law selling her home??

Any advice on this matter greatly appreciated.

margaretclare

Because your MIL is named on the loan she is equally responsible for repaying the loan, equally with her deceased husband.

I suggest that it is your MIL who needs to make it clear that she will continue repaying the loan as before, not your wife.

I assume that FIL did not leave any life assurance, nor enough estate to repay the loan?

atb

margaretclare wrote: »

Because your MIL is named on the loan she is equally responsible for repaying the loan, equally with her deceased husband.

I suggest that it is your MIL who needs to make it clear that she will continue repaying the loan as before, not your wife.

I assume that FIL did not leave any life assurance, nor enough estate to repay the loan?

We have explained to the bank that my MIL can continue the monthly payments (we will transfer the required amount to her account each month in order for her to do so) but they have refused point blank.

Unfortunately my FIL did not leave any life assurance, nor is their enough estate without the house being sold, which is something my MIL is absolutely distraught about.

Tixy

When you say your mother in law is also named on the loan - just to clarify do you mean it was a joint loan?

Check the original loan agreement to see whether if there are any specific terms in relation to the death of one of the parties to the loan. Does it say the loan can be recalled at that point?
You might want to also double check there was no PPI on the original loan paperwork.

atb

Tixy wrote: »

When you say your mother in law is also named on the loan - just to clarify do you mean it was a joint loan?

Check the original loan agreement to see whether if there are any specific terms in relation to the death of one of the parties to the loan. Does it say the loan can be recalled at that point?
You might want to also double check there was no PPI on the original loan paperwork.

Sorry, just checked with my wife - it was NOT a joint loan.

There was however NO PPI on the t&c's of the loan.

Tixy

If it wasn't a joint loan then they are entitled to try to recover the funds from his estate. I would assume its very unlikely your MIL will get a loan to pay off his loan (which is why they won't just let her continue with his payment). Therefore you may need some legal/financial advice to try and find a way forward (that doesn't involve selling the house to release the equity).

If you were planning on actually repaying the loan anyway would you be in a position to take out a loan and pay off this debt?
Perhaps you could draw up an agreement that you have lent this money to your Mother in Law and that therefore when her house is sold in the future/or when she dies this money will be repaid to you.

Other than that maybe you could look at some sort of equity release so she can pay the debt off (although proceed with caution as there are lots of really bad deals around)

magpiecottage

Assuming the loan is not secured on the home (assuming the house is in joint names and the loan isn't then I can't see how it could be) then the bank becomes simply another creditor of the estate.

Making an educated guess, if your loan is from Clydesdale bank then the property is in Scotland and I am not sure how joint ownership works there.

However, if full ownership automatically passed to the survivor on death (as can happen in England) then the bank will only have a claim against other assets.

CLAPTON

magpiecottage wrote: »

Assuming the loan is not secured on the home (assuming the house is in joint names and the loan isn't then I can't see how it could be) then the bank becomes simply another creditor of the estate.

Making an educated guess, if your loan is from Clydesdale bank then the property is in Scotland and I am not sure how joint ownership works there.

However, if full ownership automatically passed to the survivor on death (as can happen in England) then the bank will only have a claim against other assets.

In England the bank can recover debts from the deceased estate even if the property is held as joint tenants
whether they would go to court or what ruling a judge would make is another matter

margaretclare

atb wrote: »

Sorry, just checked with my wife - it was NOT a joint loan.

There was however NO PPI on the t&c's of the loan.

This clarifies the matter.

atb

Tixy wrote: »

If you were planning on actually repaying the loan anyway would you be in a position to take out a loan and pay off this debt?
)

We tried but no luck.


I am getting confused though. I have read various other threads on here regarding loans where people have defaulted. People have stated that it would be a waste of time for the banks to pursue because a judge would only rule a CCJ in which a payment proposal is feasible.

I mean what court in the land is going to take a 70 year old womans house away from her if we can make the existing monthly payments.

Why in the event of someones death does there seem to be no leniency?

Pee

Try the CAB. I have seen loans written off in these circumstances, even though the other poster is correct and they could order a sale of the house, they are unlikely to do so.

Def worth pursuing.