Inherited credit card bills

monkeypony

My father has recently passed away and we have since discovered several credit cards that he was paying off amounting to £30000 in total.
Does anyone know if there is any way that my mum can avoid having to pay these bills as she was not aware that my dad had them until we found the statements after his death. her name is obviously not on these cards, but as his spouse we have been told that she is liable.

I understand that if there is money in the estate, all bills have to be paid. Obviously there is property that could essentially be sold to pay off debts, but this is just unthinkable!!

Thanks

hcb42

Is the house owned as joint tenants or tenants in common.

Who has told you she is liable?

Did your father have any other assets other than the home?

National_Debtline

Hello there.

Sorry to learn of your loss.

Your mum isn't directly liable to pay for the debts - although as you've already pointed out the money could be claimed from the estate. There are important rules as far as property is concerned, here are the basics (taken from our fact sheet):

Mortgaged house

When you buy a house in joint names there are two types of ownership status you could have.

Joint tenants

If you owned the property as ‘joint tenants’ then he property passes automatically to the surviving owner. This means the property cannot be sold off to pay the debts.

It is possible for creditors to apply for an ‘insolvency administration order’ within five years of the person dying. This allows the court to order the surviving owner to pay the value of the deceased person's equity into the estate, (e.g. half the equity.) If any of the creditors threaten to do this, it might be possible to negotiate paying a smaller amount in settlement of the debt rather than lose the house. The court will usually decide that the interests of the creditors are the most important, unless there are exceptional circumstances.


Although this is a rare procedure, it makes it very important that a surviving owner negotiates with any creditors to make arrangements to pay he debts back to avoid the insolvency administration procedure being used by creditors

Tenants in common

If you owned the property as ‘tenants in common’ the property has to be formally transferred to the surviving owner. It is not automatically transferred.

In this case, if there are debts, then the deceased person's share of the house would be used to pay off the debts.

After the debts are paid, the person's share of the house goes to whoever they left it to in a will. If there is no will, then there are set rules for who will be treated as the next of kin and inherit the estate.

It is very important that the surviving owner negotiates with the creditors to make arrangements to pay the debt back to avoid the house being sold.

How to check

To find out whether you are joint tenants or tenants in common, you would need to contact the Land Registry to see if any restrictions on inheritance or ‘succession’ were registered. You can also check with your original conveyancing solicitor to find out.

If your house is owned as tenants in common you would need to find out if there is a will. The joint owner of the property could come to an arrangement to pay off the deceased's debts to stop the house being sold. They may have to take over the mortgage, or take out a new mortgage to keep the house. This would be particularly important if they are living in the house, or are going to inherit the person's share of the house.

What if your name is not on the mortgage?

If someone is living in the house who is not a part owner or married to the person who died, check if there is a will leaving the house to them. If not, then there may be a problem staying in the house permanently. Specialist legal advice from a solicitor is needed.

You can read the full fact sheet here:
http://www.nationaldebtline.co.uk/england_wales/factsheet.php?page=21_what_to_do_about_debt_when_someone_dies

Given the fact that there is a property, do consider seeking further advice.

Best wishes,

David @ NDL.

marty2be2000

I believe that it the debt was unsecured, and there is no money in the estate then the debt will be written off. We have been through this recently although the sums involved were smaller and both CC companies wrote the debt off once they were made aware of the situation.

antrobus

marty2be2000 wrote: »

I believe that it the debt was unsecured, and there is no money in the estate then the debt will be written off. We have been through this recently although the sums involved were smaller and both CC companies wrote the debt off once they were made aware of the situation.

In the OP's case there is a house. See above post #3.

grannyjo

Is the house in your fathers name only- or joint tenancy- or tenants in common. tenants in common means they own half each. Joint tenants mean it automatically belongs to a surviving spouse or partner. Its worth finding out before you get advice. I think you need help from the c.a.b or similar. My son owed a lot of money once and going to a debt agency (don't go near the ones that charge fees) meant he had to pay back, but within his budget and no more interest was charged. It may be that if they do chase the debt then it will be cheaper to take out a 'second' mortage with a lower interest rate- but take some good qualified advice. Good luck

Atidi

monkeypony wrote: »

My father has recently passed away and we have since discovered several credit cards that he was paying off amounting to £30000 in total.
Does anyone know if there is any way that my mum can avoid having to pay these bills as she was not aware that my dad had them until we found the statements after his death. her name is obviously not on these cards, but as his spouse we have been told that she is liable.

I understand that if there is money in the estate, all bills have to be paid. Obviously there is property that could essentially be sold to pay off debts, but this is just unthinkable!!

Thanks

Sorry to hear of the loss of your father, but who do you think should pay the £30k he owed when he died? Who advised your mum she was liable?

Losses of that size, even split across numerous creditors, can ruin many a small business.

The debt will need to be paid from the estate. The executors or administrators will need to sort that out.
Only if the estate doesn't have sufficient funds should the creditors lose out.
If the house was solely his, then that will form part of the estate and will probably need to be liquidated (sold) to settle the outstanding debts, no matter how unthinkable that may be.

Many old codgers are having to sell their homes whilst they are still alive to pay for care. As least your late father has no further use for the property.

Biggles

monkeypony wrote: »

I understand that if there is money in the estate, all bills have to be paid.

That much is essentially correct, but what is key is to establish what exactly the estate consists of.

It seems likely that the house will not be part of the estate (if it was a joint tenancy) and any joint bank accounts will not be part of it - they all go directly to your mother without the estate being involved.

You need to ask the executor - or is that you? - what is in the estate.

usignuolo

Something similar happened with my f-i-l. Barclaycard just helped themselves to the outstanding amount on his card, from his bank account, when he died.

This is NOT my case, but an identical scenario I found on the web at the time
(2006)

"In September my father passed away leaving his bank account with Barclays and an outstanding balance on his Barclaycard, not being a particularly rich man he had a sum of money in his bank account and an outstanding balance on his Barclaycard.

"A few short days after his death and after Barclays had been informed of this a letter arrived offering it's sincere condolences and informing my mother that any credit my father had in his Barclays accounts would now be recovered to offset the debt on his Barclaycard. The money was then removed from his bank account. This left 2p in his bank acount.

" (On querying this with Barclays I was told) "...as Barclays PLC trading in both Barclaycard and Barclays Bank we have offset the credit balance of the account with the debit balance on the Barclaycard."

" I consulted my solicitor who confirmed that Barclays had acted illegally, as Barclaycard have no entitlement to the estate anyway as the debt was a personal debt of my late father. Presenting this information to Barclays was a choice experience, I telephoned the office in Cardiff and informed them of what my solicitor had told me. "You've been given wrong advice" was the response "we are perfectly entitled to take that money as we are trading as Barclays PLC and if that money was in any kind of Barclays account we can take it to offset the debt."

I found other similar instances at the time all involving Barclaycard and Barclays bank account holders. It seems to happen when Barclays bank is notified of the account holders death. I assume the probate department organises a "sweep" to check on other accounts the deceased had within the Barclays group, which may include Barclaycard. Where this is the case and the account holder has a Barclaycard account with an outstanding balance, it takes the Barclaycard debt from the Barclays bank account or similar Barclays holdings. This is invariably justified on the grounds Barclays bank and Barclaycard are both part of the Barclays trading group.

tiger_eyes

Atidi wrote: »

Sorry to hear of the loss of your father, but who do you think should pay the £30k he owed when he died?

Credit card companies know the rules - if the debtor dies without enough money in the estate, the debts are written off. This is a business risk that they take on willingly. I don't see any kind of moral argument here.

Atidi

tiger_eyes wrote: »

Credit card companies know the rules - if the debtor dies without enough money in the estate, the debts are written off. This is a business risk that they take on willingly. I don't see any kind of moral argument here.

... and if they die with any assets, that should first go towards paying off those creditors before any remainder is distributed to those expecting to inherit, no matter how unthinkable that may be to them. That's the role of the executor or administator as the case may be.

Agreed, no kind of moral argument here.