New poster - Mum in trouble - HELP!

HelpingMum_2

Hi to all,
Much needed advice welcomed.
My Father, who always took charge of finances, died very recently.
Unbeknown to Mum, he had taken out an unsecured bank loan for £5k.
He was the sole signatory for the loan although they had a joint account.
Whatever reason he used the money for has followed him to the grave since there is very little cash remaining in the account and small life policy was used to cover funeral expenses.
Mum is 76 and in receipt of the state pension.
The bank have told Mum she is liable to pay the loan.
Any suggestions would be much appreciated.

Thanks.

Astaroth

Firstly, sorry for you loss.

Secondly.... if your father was the sole applicant for the loan then its repayment was soley his responsibility (double check this one as I know that when my father died he had taken loans out to support his business etc but had forged my mothers signature on the application forms)

The bank therefore only has a claim for their money against his estate and not your mother. The laws of probate do set out the "pecking order" for claims against the estate and the solicitor dealing/ the citizens advice beaurau will be able to assist in this.

Is their home owned or rented?

Unfortunately creditors will try and convince people that they are responsible for their partners debts but this is not true

Bossyboots

As Astaroth says, your mum has no personal liability for the loan if she didn't sign it.

The key issue here does seem to be whether they were living in owned or rented accommodation as the loan would be repayable from your father's share of that if it was owned and there was equity available.

thriftyjo

It may be worth trying to get to your local Citizens advice bureua ~ They might act on your mums behalf in writing letters etc ... Sorry I can't be of more use! I am truly sorry for your loss.

HelpingMum_2

First of all, many, many thanks for your replies. They are truly appreciated.
Her home is owned but still subject to mortgage repayments (they were "late in life" buyers).
There is definitely positive equity in the property but it would kill Mum if she had to sell or move.
There is a little cash available - approx £1200 still in the joint account.
I am considering approaching the bank to see if they will either write off the loan or accept the above amount as full & final settlement considering the circumstances.
Nothing ventured, nothing gained.
Thank you for your help.
I will keep you posted with any progress.

Bossyboots

HelpingMum wrote:

First of all, many, many thanks for your replies. They are truly appreciated.
Her home is owned but still subject to mortgage repayments (they were "late in life" buyers).
There is definitely positive equity in the property but it would kill Mum if she had to sell or move.
There is a little cash available - approx £1200 still in the joint account.
I am considering approaching the bank to see if they will either write off the loan or accept the above amount as full & final settlement considering the circumstances.
Nothing ventured, nothing gained.
Thank you for your help.
I will keep you posted with any progress.

I wonder whether it would be worth seeing whether the bank would secure the loan on the house to be repayable upon your mum's death, rather than her have to sell for what is really a comparatively small sum of money. Obviously try what you have suggested first, securing the loan is just an option that might be feasible if they won't do it any other way. Alternatively they could register a caution against the property which would prevent its sale without them being informed at which time they could move in for their money.

jonesMUFCforever

Let's be very clear here OP said father had taken out an unsecured loan of £5000 from his bank in his name.
Mother is in no way liable for this loan in any way shape or form even if repayments came from a joint account and original funds were paid into that joint account.
Her family should immediately take her to the bank (if possible, or do a letter if not) cancelling the direct debit payment for the loan.
I don't know whether the bank have said in writing that Mum is responsible for the loan but if they have take it to CAB and they will sort it out for her pronto.

Bossyboots

ejones999 wrote:

Let's be very clear here OP said father had taken out an unsecured loan of £5000 from his bank in his name.
Mother is in no way liable for this loan in any way shape or form even if repayments came from a joint account and original funds were paid into that joint account.
Her family should immediately take her to the bank (if possible, or do a letter if not) cancelling the direct debit payment for the loan.
I don't know whether the bank have said in writing that Mum is responsible for the loan but if they have take it to CAB and they will sort it out for her pronto.

While mother may not be personally liable, the estate of the father is. If that estate only comprises the house, then that is where the funds will have to come from.

Even as joint tenants, the property doesn't pass free of encumbrances. There is therefore a asset in the deceased's estate against which to enforce the loan.

regularsaver1

Yes they will always look at the estate and that is what the property is

HelpingMum_2

Bossyboots wrote:

While mother may not be personally liable, the estate of the father is. If that estate only comprises the house, then that is where the funds will have to come from.

Even as joint tenants, the property doesn't pass free of encumbrances. There is therefore a asset in the deceased's estate against which to enforce the loan.

Once again, thanks to all.
Bossyboots and regularsaver1 are correct.
I have been advised by the Nationalhelpdebtline that the bank can claim from the estate.
It was hinted however, that a case for irresponible lending might bring a positive response from the bank.
To allow an unsecured loan and without insurance cover to a 76 yr old pensioner with a long history of heart problems may indeed be a case for "irresponible lending".
If the bank do pursue settlement from the estate, a letter to the banking Onbudsman might just agree with a case of irresponsible lending.
We'll see what happens when the bank responds.
Will keep you all posted.
Thanks again all.

jonesMUFCforever

Quote from HELPINGMUM's original post
The bank have told Mum she is liable to pay the loan

I was answering that question. Mum is not liable for the loan the estate is.
She should ensure that the direct debit for the loan is stopped and the executors take it up with the bank.