do debts die with you

menace_one

do credit card debts die with you or is the spouse responsible

DarkConvict

I'm sorry to hear about your father, i myself know how difficult the following months can be after the shock has subsided.

You say your father died with no assets, but you state there is a house. Was your father a part owner of this house, if so it would be considered an asset and as such any creditors would have a claim on it upto the share of the house your father owed.

You are required upon death to notify all creditors, if you are unsure of any creditors then an advert should be placed in the London gazette (Edinburgh Gazette for scotland) to tell them to come forward. They have i believe 6 months to stake a claim.

If however, your father really did not have any assets left at all, then any remaining debt is wiped off, so long as the account was only in your fathers name, any joint accounts are still owed by any remaining account holders. - http://www.direct.gov.uk/en/MoneyTaxAndBenefits/ManagingDebt/DebtsAndArrears/DG_10013093

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Edit, i have just read your father was a part owner of the house. Say the house was worth £100,000 and he owed 50%. Then a charge or charges (several debts) could be placed on the house for upto £50,000. Obviously the charge is just in his name. So if the house was sold still with a £80,000 mortgage, then the remainder (£100,000 - £80,000 = £20,000), the 50% he owned (£10K) would be used to used to pay the charging orders. If it cannot pay all the charging orders then the remainder is written off as no one else is liable, if there is spare money this can be distributed inline with the will.

If money is distributed to benificeries before all creditors are paid, then the executor of the will is liable for creditors that come to ask for payment. This is why deaths are advertised in the gazette to give creditors time to come forward. it can get very complex which is why many people use solicitors to finalise the details.


Read this as well, a jointly owned property has a restriction not a charging order - https://forums.moneysavingexpert.com/discussion/1839539

Marisco

Thanks DC, that is interesting. One thing puzzles me though, why would the DCA write to ask her to put a "voluntary" charging order on the house?? Is it because they know they cannot get one any other way? I think it's shocking that people get hounded for money after a loved one has died!:mad: These banks and financial institutions are not short of a bob or two, they should just write them off!!:mad:

DarkConvict

You have to see it from a banks side.

If you lent someone £10,000 to buy a car. They lent the money because they spent it on buying the house. 3 months later the person passes away in a car crash. The family comes in and executes the will. There is no money left in accounts its just the house they had left. You would still expect your £10,000 back, you would not just write it off.

Debts that have to be written off are a loss, like insurance this costs us all. The bank takes a hit in the year it happens then increase interest rate the next year to cover the debt.

Dealing with debts can be complex if they cannot just be paid off upon death but instead there are assets can be sold to raise funds to pay it off.

My advice is you need professional advice, get a free 30 min sessions with a solicitor and contact national debtline/CCCS for advice on dealing with debts after death.
Professional advice will prevent the situation getting worse.
This side of debt is not something i am familiar with so i do not know why they ask for a voluntary order, maybe it is because of the costs involved in getting it done via the courts.

Marisco

No, I have no problems like that at all, I just like to know these things:) I understand what your saying re debts, but nonetheless I think when the person owing has died they shouldn't hound those left for it. And they certainly shouldn't expect people to sell the family home to pay it off. There could be an argument for paying back if there is money or anything else i.e stocks, shares etc, but not a house, especially if the relatives are still living in it!!

wacko911

The charging order cant be used to force a sale AFAIK, just when you do sell it, they can claim that amout of the charging order.

DarkConvict

I can see your stance but i cannot agree with it as it could be abused by those that are ill. If the house was worth £100,000 with £80,000 mortgage as above. What is to stop someone taking out 2-3 loans at £20,000 each. Using the pure cash to buy out more of the mortgage then not pay it back, there is no cash left just the asset it was used to buy.

If you think this is bad, you should see inheritance tax, Weston park (where V festival is held) was a family estate until a few years ago. Then the owner died and left it to the son who could not pay the 40% tax and had to sell the estate they had owned for generations.
The money is not paying any debts owed, it purely goes into the government coffers.

Debts are only not repaid when there is no estate remaining, that is the fairest way. It is harsh but those who owe money need to understand the consequences even if that consequence is the sale of family air-looms for been unable to repay money owed. Much like bailiffs taking away property from those who were unable to pay debts. its not nice but money is repaid one way or another.

Marisco

Cheers Wacko, I didn't know that. I thought they could force people to become homeless just for the sake of a few grand!! That's not so bad then if they are willing to wait until its sold. But what happens if it just gets passed from person to person? Or is it just limited to the people who live in it, i.e it cannot be passed on to any relative who lives somewhere else, it has to be sold to pay the debt?
DC, that could happen anyway though. I've got nowt (renting) but my credit rating is good (oh's I think is still rubbish) if I was diagnosed with a terminal illness, there would be nothing stopping me getting loans and cc's and spending like a loon, knowing that oh would not be liable to pay them back when I'm gone? I'm surprised that doesn't happen oftener!!!

menace_one

I can see where you are coming from DC but why should I or my mother be held responsible for my late fathers debts?, 1st credit are a debt recovery company who have most likely brought the £2800 debt from MBNA for a pittance anything they recover would be a bonus why should they hound us for the £2800 PLUS any interest they add to the charging order. Banks have insurance to cover unrecoverable debts so it is not Joe public that suffer. Because they are asking for a "voluntary Charging Order" does this mean they are not confident of getting a court to place a charge on our house, I have a young family living under this roof and do not want to jeopdise their security.

Marisco

Menace, I apologise for going off on tangents:o But these sort of conundrums are interesting, and you never know when the knowledge will come in useful;)

TonyMMM

menace_one wrote: »

but why should I or my mother be held responsible for my late fathers debts?,.

You aren't responsible, but your fathers estate is ..... by offering to put a voluntary charging order on the house, it seems they are offering you the option of the estate paying the debt when the house is eventually sold, and not forcing the sale now.