Dead spouse loan-is the other spouse liable?

martinf1805

Hi

My dad died over 18 months ago but this week my mum received a letter from Direct Line telling her that as his appointed representative, she was now liable to pay the balance of an unsecured loan he took out in 2006.
There's just over £2k left of an original £20k loan.
I was hoping someone might be able to advise how to respond to their letters?

Any help would be appreciated.

Thanks
Martin

Apples2

Most important point. Is the loan a Secured Loan on the house and is the house in joint names?

If it was a Personal Unsecured Loan of your Fathers, the debt should be paid out of his estate. You Mother does not become liable for his debt.

Are you sure they aren't referring to her as the executor off his will and suggesting she should pay it from his estate?

Thrugelmir

Why wasn't this dealt with at the time by the executors?
The problem that you face is that your late fathers assets were presumably transferred to your mother.

Are there other undealt with matters relating to your late fathers estate?

If executors were appointed then they could be personally liable.

martinf1805

Hi

Thanks for posting.

My mum and sister sorted things out and no official executor was appointed. Mum was just mentioned a s the beneficiary in a rudimentary will.
It was all pretty Heath Robinson.

martinf1805

The loan was an unsecured personal loan.
Other than a 9 year old car there are no assets save his half of the marital home

MEM62

'Appointed representative'? Oh yeah, says who?

If the loan was not in joint names or secured against the property then politely tell the to go away.

zzzLazyDaisy

martinf1805 wrote: »

Other than a 9 year old car there are no assets save his half of the marital home

Where there are insufficient funds in a deceased person's estate to pay the outstanding debts, this is technically an insolvent estate. In those circumstances there is legislation to allow the creditor to pursue repayment from the deceased's share of a joint property, regardless of the fact that the usual rule is that the joint asset would normally pass directly to the surviving joint owner without going through the will (or in this case the intestacy).

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

What this means in plain English is that if your Dad owed money to someone at the date of his death, it is possible for the creditor to have the estate declared insolvent and then to have your Dad's share of the marital home drawn into the estate for the purpose of paying outstanding debts at the date of his death.

Whether the creditor would in fact take such steps for a comparatively small amount of money is another thing.

D