death and credit card debt

horseypony

I am wondering if someone can help me? My father in law has been diagonsed with terminal cancer and only has a matter of weeks/moths to live. he is worrying as he owes roughly £32,000 on credit cards. All upto date with payments etc but doesn't think he has PPI on any of them. When he passes away will the debt die with him or will they chase his wife for the outstanding balances??

jd87

They won't chase his wife but they will chase his estate. She won't personally be liable to pay the debt, but if he leaves any estate of any value then the debts will need to be paid out of it before anyone else gets a look in.

horseypony

he has no savings but owns half the house, so will they make her sell the house??

chattychappy

They can claim from the house, but my guess is that they would (could) not force a sale (perhaps place a charge on it). Depends a bit on the circumstances and how the house is held.

stebiz

Do they have a mortgage on it. A quick transfer comes to mind??;)

paye

stebiz wrote: »

Do they have a mortgage on it. A quick transfer comes to mind??;)

I agree. Get on it right away.

chattychappy

stebiz wrote: »

Do they have a mortgage on it. A quick transfer comes to mind??;)

paye wrote: »

I agree. Get on it right away.

Not sure exactly what is being proposed, but transactions intended to put assets beyond the reach of creditors can be reversed (eg by s423 Insolvency Act 1986).

stebiz

chattychappy wrote: »

Not sure exactly what is being proposed, but transactions intended to put assets beyond the reach of creditors can be reversed (eg by s423 Insolvency Act 1986).

That is the insolvency Act. It only covers IVA's, Bankrupcy and Companies getting wound up. IMO

chattychappy

stebiz wrote: »

That is the insolvency Act. It only covers IVA's, Bankrupcy and Companies getting wound up. IMO

No it doesn't.

s423 deals with precisely the situation where someone engages in a transaction with a purpose to put assets beyond the reach of creditors.

It applies to individuals and companies. An action can be brought by any "victim" of such a transaction (in this case, the CC).

Other provisions may apply too.

antrobus

stebiz wrote: »

That is the insolvency Act. It only covers IVA's, Bankrupcy and Companies getting wound up. IMO

The Insolvency Act covers insolvent estates as well.

When the estate of a deceased person is insolvent the provisions of any will made relating to the beneficiaries do not apply. The estate should be administered under the provisions of the Administration of Insolvent Estates of Deceased Persons Order 1986 and Section 421 Insolvency Act 1986.

http://www.hmrc.gov.uk/manuals/insmanual/ins1703.htm

Section 421(A)(1) Insolvency Act 1986

When a petition for an Insolvency Administration Order has been presented after 2 April 2001 and within five years of the death, upon application to the Court under this provision

• the Court may require the survivor to pay an amount not exceeding the value lost to the Estate by the automatic transfer of a joint share in the property to the survivor.

The Court will have regard to the circumstances of the survivor in reaching its decision.

http://www.hmrc.gov.uk/manuals/insmanual/ins9538.htm

chattychappy

Yep. Indeed - though that provision covers "automatic transfer", ie property that passes by survivorship under joint tenancy rules. If property passes by survivorship, it would never form part of the estate. This mechanism allows the property to be reclaimed if the estate is insolvent.

s423 operates at the time of transfer and provides a remedy where people transfer property in advance of insolvency to deprive creditors. In fact you don't even need a bankruptcy, IVA, death etc. Just need to establish that a substantial purpose is to protect it from creditors which can include future potential creditors. You don't need to establish any particular dishonest intent.