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death and credit card debt

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Comments

  • lisyloo
    lisyloo Posts: 30,094 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    Might be useful if anyone can advise on the likely actions by the lender.
    Will they write off £32K or will they put a charge on the property?
    Will a court agree to a charge? Is there any chance of eviction?
  • Mojisola
    Mojisola Posts: 35,571 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    antrobus wrote: »
    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
      Yes, absolutely. It's given in s421 IA1986 as quoted earlier in the thread and there has been much case law.

      http://www.legislation.gov.uk/ukpga/1986/45/section/421A

      Yes, we have joint owners who have a property. It was considered unfair on creditors if one owner could die leaving debts unpaid whilst the other owner takes over full ownership.

      Judging by the bit in bold above it's not clear cut - "the Court may require the survivor to pay" and "The Court will have regard to the circumstances of the survivor in reaching its decision."

      Are there any cases where the courts have forced a sale of a surviving spouse's home?
    • lisyloo
      lisyloo Posts: 30,094 Forumite
      Part of the Furniture 10,000 Posts Name Dropper
      I would have thought it's highly unlikely on publicity grounds alone.
      But might put the OPs mind at rest if anyone has any knowledge on this.
    • chattychappy
      chattychappy Posts: 7,302 Forumite
      Mojisola wrote: »
      Judging by the bit in bold above it's not clear cut - "the Court may require the survivor to pay" and "The Court will have regard to the circumstances of the survivor in reaching its decision."

      Pretty standard drafting. The courts know what to do with it! The legislation gives guidance at (3):
      "in determining whether to make an order under this section, and the terms of such an order, the court must have regard to all the circumstances of the case, including the interests of the deceased’s creditors and of the survivor; but, unless the circumstances are exceptional, the court must assume that the interests of the deceased’s creditors outweigh all other considerations."

      Note the last past, emphasis added.
      Mojisola wrote: »
      Are there any cases where the courts have forced a sale of a surviving spouse's home?

      Yes there have been, though the only ones I'm aware of have been for larger amounts and for non-CC debts. The last bit "outweigh all other considerations" has certainly been litigated on.

      Though this is the 1986 Act, s421A was inserted in 2001. It's relatively new.

      For 32K I would think legally it is worth pursuing, though an amicably agreed part settlement or a charge would seem like the obvious solution. PR departments might take a different view.

      It would be useful to know from an insider what current CC policy is. It's come up here a couple of times before but AFAIK nobody ever fed back the outcome.

      Not sure if the OP is really interested in all this. My initial concern was the advice earlier in the thread that her family should engage in a transaction to try and put the house out of reach. The effect of such transactions can be reversed (eg under s423). So 421A could give rise to a claim by the creditors despite joint tenancy, and if the ownership was changed prior to death to avoid this, then s423 steps in.
    • antrobus
      antrobus Posts: 17,386 Forumite
      birkee wrote: »
      Seem to recall, that if one partner goes into care, then the system can call upon their share of the house to pay for their care. You have to go through some paperworks performances to change this default position for joint owners.

      ....

      That won't work in these circumstances. It doesn't matter who is specified as the beneficiaries of the half share in the house, the creditors will still take priority.
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