Debt after Death

Devils_Avocado

A married couple jointly own a house. A mortgage is outstanding on the property but there is £100,000 of equity. The man has £30,000 of debt, all of it unsecured, all of it solely in his name.

The man dies. Does his widow have to sell the house to pay off his debts now that she is the sole owner of the property?

12bdebt3

If the debts are enforceable - yes. Check that the debts have to be repaid. Look for a "get out clause" if there is any of the loan paperwork there saying in the event of a death the debts are written off etc. Ask the creditors what to do now. IF the debts have to be paid back and the only option is to sell the property to cover the amounts then it is a possibility.

TrickyDicky101

I presume that would depend on whether they own the property as Joint Tenants or as Tenants in Common.

Devils_Avocado

arrontdep wrote: »

If the debts are enforceable - yes. Check that the debts have to be repaid. Look for a "get out clause" if there is any of the loan paperwork there saying in the event of a death the debts are written off etc. Ask the creditors what to do now. IF the debts have to be paid back and the only option is to sell the property to cover the amounts then it is a possibility.

Most of the debt is credit card debt.

TrickyDicky101

It is my understanding (and I could well be wrong) that if they own the property as Joint Tenants then the property will pass soley to the wife and the unsecured credit card debts will disappear (and not be enforecable against the property).

System

TrickyDicky101 wrote: »

It is my understanding (and I could well be wrong) that if they own the property as Joint Tenants then the property will pass soley to the wife and the unsecured credit card debts will disappear (and not be enforecable against the property).

The credit cards debts will not disappear but will be payable out of any other assets that he holds if sufficient is available. E.G. Life insurance

TrickyDicky101

!!!!!! wrote: »

The credit cards debts will not disappear but will be payable out of any other assets that he holds if sufficient is available. E.G. Life insurance

I was assuming there are no other assets (in which case the CC debts do effectively 'disappear'). But point taken

Radiantsoul

If the assets of an estate are less than the liabilities then it will be an insolvent estate.

loopholer

"a debt in death is a profit" ....... but it's hard to pull it off. Generally your partner can inherit debt but your children can't, any assets you have can be taken to repay the debt.

CLAPTON

the debts are payable from the estate; the estate includes a share of the house whether it's held as tenants in common or joint tenants

System

Incorrect. If the house is held as joint tenants the deceased portion automatically passes to the remaining tenant(s) and does not form part of the estate. However it is used in the calculation of inheritance tax.