what happens to debts if person dies?

freewilly_2

i am 65 and was left with debts of 52k when my husband died. he took out secured loans on the house which i cleared after i sold the house after he died but due to recession and falling house prices did not raise enough to clear the unsecured debts of 33k. these debts are all on a debt management programme with paylink. as they are still gaining interest, it will be 2032 before they are paid off. i will be long gone by then. i retire next month so will be £935 worse off so just be living off small occy penion and state pension. paylink are going to review my income and expenditure in april.

what happens to these debts when i pop my clogs? i have no savings but have an ex council house in which i live with my son. i bought this cheaply so we would have somewhere to live and used the surplus plus plus mortgage from northern rock after original mortgage and secured debts were paid. the original mortgage was with northern rock and when this was paid off after the house sale they very kindly, with a lot of pressure from my solicitor, gave me the small mortgage which plus the surplus money i could use to secure the ex council house as a home.

would my son be forced to sell the house to pay off the debts. the small mortgage now stands at 38k which is covered by a decreasing life assurance policy on myself which will pay off just what is due on the mortgage when i go.

my son isnt working, he has an alcohol problem, but is a good son to me especially since i was widowed. this is his home and i know he would not be able to manage if he was made homeless if he was forced to sell the house to pay off the remaining amounts left on the debts which are not his.

the last four years since my husband died have been a nightmare. i still get dreams of being starving on the street.

free willy

Happytogetdebtfree

Hi freewilly sorry for yiour loss, i did not want to read and run, i dont know what happenes to debt when you pass but lets not think of that :O ... i dont know what to suggest to get your cash debt reduced.... is it poisible to still work part time for a little wage ?? hopefully someone will be along to write some more advice hugs xx

DarkConvict

When a person dies the debts are paid out of their estate, so if your husbands debts were just in his name then only his share of the estate could be used to pay them off, 1/2 the house, the cash in his name only etc.
If there is not enough money to pay them all, they are paid as much as possible. The secured debts are paid first, and if there is any money left then the unsecured debts.

If the debts were in his name only and there was no money left the debts are written off, you wouldn't be liable for them.

You are only liable for debts in your name, either solely or joint accounts. Are you sure the debts you are paying now were actually in your name when your husband died?

Government advice - What to do about debts owed to the deceased

As to your debts, if everything is in your name not your sons, then when you leave the estate will be split between those who you owe money to, any outstanding amounts will be written off.

So if when you die your life insurance covers the remaining mortgage, the house is still an asset, if there is no cash available to pay the unsecured creditors (loans,credit cards etc) the house will be sold to pay those off. Any debt remaining is written off, if however there is cash left after the house sale this will goto your son.

If you want you son to be protected you could move the house into his name, however it would need to be in his name for a full 7 years i believe to protect it from inheritance tax and probably any debts you have. However if there is secured debts on the house i do not think you can change the ownership.

Debt_Free_Dreamer

Freewilly. you need to see a Solicitor as it may be you should not be paying the debts. Were the debts in joint names, both yours and your husbands. If they were only in your husbands name and you have already sold the house to pay part of the debt and there is no money remaining I cannot see how you are liable. They are not your debts.

If the debt was in joint names, then I am afraid you will have to pay the money back.

I would suggest you see a solicitor as the profit from the house is in question as part of that may have beloged to you if that was in joint names.

Hope you get things sorted.

heatherks

agree with previous poster ...id seek advice with lawyer or CAB ...only if the debts were in joint names should you be paying them off

if you left house to your son in your will ...i dont think he would be made to sell it ..

DarkConvict

heatherks wrote: »

agree with previous poster ...id seek advice with lawyer or CAB ...only if the debts were in joint names should you be paying them off

if you left house to your son in your will ...i dont think he would be made to sell it ..

Creditors must be paid, before the estate is shared to the beneficiaries.

bluebag

freewilly wrote: »

i don't think so. well done. i won't be posting here again.

Hi freewilly, So sad to hear of your loss. I do hope despite your comment here you will still have a look in.

It can be difficult to untangle joint debts on the death of of a partner, try and get to see a solicitor for a free half hour or make an appointment at the CAB.

I know how difficult all this can be. Keep coming on here for those that DO support and offer advice, it's just one step at a time. Easy does it!

It may seem hopeless, but it usually isn't, maybe with a little help here you could straighten things out now which would make it easier for your son to handle in the future.
Best wishes
bb

heppy23

If you make your son a tenant in common on the house (by giving him a share) then the house can't be sold to make up a shortfall in the estate. However this has implication for inheritance tax gifting (the seven year thing) and capital gains tax.

All you will do though is end up passing the debt on to your son and if he can't pay it off it will end up dying with him as debt will be paid from his estate.

heppy23

DarkConvict wrote: »

Government advice - What to do about debts owed to the deceased

this is a better link
http://www.direct.gov.uk/en/MoneyTaxAndBenefits/ManagingDebt/DebtsAndArrears/DG_10013093

the first link posted refers to debts owed TO and not BY the deceased.

freewilly_2

thank you to all those who posted helpful supportive replies to my original question. i have applied to the building society for the property to be put in joint names with my son and am going to see the solicitor to change my will.

many thanks

freewilly

davek1

Hi free willy. So sorry to hear of your loss. Please try not to worry the advice you have been given here is sound and good advice. If there is not enough funds left from your husbands estate then quite simply the debts die with the deceased. Write to the creditor and send them a copy of the death certificate. Mst will be fine you may get one or two that play at being difficult but whatever else you do stop paying these people now. It is not your responsibility.

Dave