Cretid card debt after death

mikefromGU

Hello,
My situation is this.
Dad passed away recently. We're in the early stages of sorting 'things' out (repatriation being just one of them). I now know he had credit card debt of £50k+ across multiple credit companies/banks. In terms of the estate, there is very little cash. However the house is joint and will transfer over to my Mum and will form part/all of the estate. What I do not know is what this means for my Mum - practically speaking - iro the credit card debt. I understand the credit companies will, quite rightly, expect payment via the estate - so, what can I do to limit/ensure my Mum is not burdened with such a crippling debt? I understand the debt is not *hers* but will still need to communicate/negotiate with creditors, but how will this work in reality? What is the likely outcome in this situation?

I've read a lot of posts on a lot of forums. I would really appreciate some clear-cut advice or personal experience - not opinion. I am dealing with my Dad's solicitor but I cannot put my full confidence in just one person. Anyone here with advise/experience and willing to share that would be gratefully received.

Regards and thanks

jo-bo

Firstly sorry about your sad news.
The important facts here are, was the house mortgaged, was there any ppi on the cards/loans and did your father have any life insurance?

whambam

I used to work for a LTSB 8 years ago and I rememeber passing customers to the underwriting department when a breavement occured to close their account I am 90% sure they got written off if on sole name. If join expect the other half to pay. However, my laywer recently told me new laws are being implemented that the family has to pay it off even on sole name!

CKhalvashi

whambam wrote: »

I used to work for a LTSB 8 years ago and I rememeber passing customers to the underwriting department when a breavement occured to close their account I am 90% sure they got written off if on sole name. If join expect the other half to pay. However, my laywer recently told me new laws are being implemented that the family has to pay it off even on sole name!

You're not liable for my liabilities, I'm not liable for yours, it's the same case here.

CK

mikefromGU

jo-bo wrote: »

was the house mortgaged, was there any ppi on the cards/loans and did your father have any life insurance?

Yes
No
No

Thanks

bartman100

I was in the same situation last year my nan passed with credit card debts of £15,000 because they were solely in her name all we had to do was call the credit card companies tell situation forward a copy of death certificate and they wrote the debt off.
My Nan & Grandad owned their property out right and the property was put into my grandads name and he still lives in it as of this day.
The credit card companies were brilliant they gave us no problems at all during this process.
Hope this helps

mikefromGU

Thanks. That's a good insight. Hopefully the same will happen in this case...

Simon7685

I agree with what the others have said, if it was in his name only and he had no estate as such, then your Mother is not responsible and they should be written off by the CC companies.

However I have heard and read on this and other forums that sometimes they will try and tell you that your Mother has to pay off the debt as she is responsible. It's a rotten trick and something you don't need when there is a bereavment but in a way I suppose you can't blame them, they want their money back if they can. I have also heard of these debts being sold on and then you get all sorts of scumbag debt collecting firms hassling you with their threats etc.

My advice would be to ask the CC companies to put it in writing that the debt is written off if you can. That way if 12 months down the line it does end up with a debt collector, you can stick two fingers up and just send a copy of the letter from the CC company.

Of course none of that may happen but it might better to expect the unexpected and plan ahead.

chattychappy

Legally, jointly held properties can be held two different ways - as Joint Tenants or Tenants in Common.

The usual way for married couples is JT.

If a spouse dies and the property was held as JT, then the house passes by survivorship. It does not form part of the estate and is not normally available to pay off debts.

If the property is held as TIC, then the deceased's share forms part of the estate, is available to pay off debts, and the transfer of what is left is governed by the will (or the rules of intestacy if there was no will).

If a property has passed by survivorship and the estate is insolvent (ie there is not enough to pay off debts), then creditors can apply for a court order in order to recover in respect of the property. This is not automatically granted and it is for the creditors to take the initiative, not the executors/family.

That is the legal position. Everything I have read on these forums suggests that in practice for normal consumer debt, CCs write them off if the assets immediately available are in sufficient to pay them down. They may not take the position on trust, though. (Which is understandable.)

ILW

I would susoect on a £50k debt, they may look rather closely into the estate. Bit different to a few hundred pounds.

antrobus

chattychappy wrote: »

..If a property has passed by survivorship and the estate is insolvent (ie there is not enough to pay off debts), then creditors can apply for a court order in order to recover in respect of the property. This is not automatically granted and it is for the creditors to take the initiative, not the executors/family....

It's in s421a Insolvency Act 1986. But the Act does say;

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.

So whilst the granting of an order might not be 'automatic', the presumption would be that it will be granted.

chattychappy wrote: »

...That is the legal position. Everything I have read on these forums suggests that in practice for normal consumer debt, CCs write them off if the assets immediately available are in sufficient to pay them down. They may not take the position on trust, though. (Which is understandable.)

Yes, in the OP's case, it is clear that s421a IA 1986 does apply, and that therefore Mum is (effectively) liable for the debt. Whether the lenders in question choose to apply for an insolvency administration order would be another question.