What happens to credit card debts when you die

King_Weasel

I seem to have opened a bit of a hornet's nest here. My original question was focused on the 0% deal, not the debt itself. It looks like Tixy in #9 above has got it right as (s)he quotes actual T&Cs.

I guess the moral is don't die soon after taking out one of these 0% deals. It was bad enough when our cat died before finishing its cat food.

MrPlinky

Tixy wrote: »

House owned as joint tenants or tenants in common?

For the purposes of my own situation, joint tenants.

Although it would be acedmically interesting to see what would happen for tenants in common too...

dazza.mk

MrPlinky wrote: »

For the purposes of my own situation, joint tenants.

Although it would be acedmically interesting to see what would happen for tenants in common too...

For Joint Tenants the house would go to the spouse without being part of the estate, the creditor does have the option to apply for an insolvency order to effectively treat the property as tenants in common and therefore recover the money accordingly ..... but probably unlikely to do so for minor debts.

For Tenants in common the 50% share in the house is part of the estate that would need to be dealt with by the executor.

Vortigern

.......or in the event of your death, we shall be entitled:
(a) without notice, to end, restrict or suspend your right, and/or the right of any Additional Cardholder, to use the Card, PIN or Card number;
(b) to charge interest forthwith at the standard rate for Standard Purchases on any Promotional Purchases and/or Balance Transfers then outstanding on the Account;
and/or
(c) subject to serving on you any notice required by law, to end this Agreement (and, for the avoidance of doubt, each part of this Agreement).

I wonder how they would serve notice on a dead person?

Uxb

They serve it on the executor/administrator.
Just as the Inland Revenue may send a tax form to fill in for the deceased and if necessary demand to pay tax to the executor.

pvt

Tixy wrote: »

It is certainly usual practice that consumer credit creditors cease charging interest immeditately once they are notified of the death by the executors and whilst the estate is dealt with.

But I am unaware that there is any legislation which requires them to do so.

And in most credit card agreements there is a clause along the lines of this one (ASDA)



or this one (HSBC)



I'd be suprised if they were in the T&Cs if there is specific legislation that means they are not valid terms

Tixy,

I wasn't saying there is legislation that says they can't charge interest - But rather that the contract with a dead person would end on their death and no further interest could be added after that date - the debt, with interest accrued up to the date of death, will obviously be a liability of the estate.

The excerpts you've found seem to suggest otherwise - So I stand corrected, if a little surprised.

jonesMUFCforever

A contract will end when somebody dies - there is no law stopping people charging interest on the debt although in my experience credit card companies will stop charging interest upon been informed of the death.
If there is a 0% deal in place it will end upon death.

MrPlinky

dazza.mk wrote: »

For Joint Tenants the house would go to the spouse without being part of the estate, the creditor does have the option to apply for an insolvency order to effectively treat the property as tenants in common and therefore recover the money accordingly ..... but probably unlikely to do so for minor debts.

For Tenants in common the 50% share in the house is part of the estate that would need to be dealt with by the executor.

Ok, thanks. I understand that.

But what about the £30000 cash (from a pension pot or from savings). Would that be used to pay off some of the mortgage. Or would it go straight to the credit card debt?

Someone posted earlier on that unsecured debts are dealt with last, but on the other hand, if you are joint tenants, then does that mean because the mortgage is passed naturally
to the spouse on death then any assets from the estate won't be used to pay it off?
I guess the situation is different if you are tenants in common.

giblet10

King_Weasel wrote: »

Happily for me this is a hypothetical question but in the best Boy Scout tradition it would be useful to know.

I believe that like any other debt a credit card debt is payable out of the deceased's estate. But if someone dies from a surfeit of stoozing what would happen to their 0% deal? Does this also stop instantly upon death or could it be transferred to whoever becomes responsible for the debt, giving them longer to pay it off without interest charges?

Cabot Financial will come and dig up your grave then sell your soul on eBay.

dazza.mk

MrPlinky wrote: »

Ok, thanks. I understand that.

But what about the £30000 cash (from a pension pot or from savings). Would that be used to pay off some of the mortgage. Or would it go straight to the credit card debt?

Someone posted earlier on that unsecured debts are dealt with last, but on the other hand, if you are joint tenants, then does that mean because the mortgage is passed naturally
to the spouse on death then any assets from the estate won't be used to pay it off?
I guess the situation is different if you are tenants in common.

Yep, if Joint Tenants the 'remaining tenant' would automatically become the sole owner and solely liable for the mortgage, with those details alone (ignoring the pension fund, credit crads) there (effectively) is no estate