Debt after Death confusion.

Artshot

Hello
Hopefully I have posted this to the correct forum.

Here's the details first.

My mother died in November 2014, leaving debt with MBNA, today I received a letter from DrydensFairfax solicitors who are acting on behalf of Arrow Global who have bought the debt.

The problem is that the amount left after the funeral expenses is not enough to settle the balance, there's also 3 other debts to take into consideration.

Here's what I have thought, having nothing to back this up.

I worked out the percentage of the debts to each creditor, MBNA is 47 percent of the outstanding debts, I then worked out 47 percent of the remaining money after the funeral costs.

Is this amount a fair amount to offer ?, it works out at 33p in the pound of the outstanding debt to MBNA.

To add to the confusion, I own the house we shared, I pay the mortgage, I pay the insurance on the property.

However my mothers name is on the deeds and land registry information as the house was initially purchased using the right to buy scheme, that is the only reason her name is on them, all responsibilities for the house have been mine from day 1.

My question concerning the house is, is the house part of the estate ?

The Debt owed to MBNA is £6900, I doubt it was bought by Arrow Global for more than £1000

Any insight or information would be greatly appreciated.

Thank You
Artshot

alun4

The House was bought at a discount under the scheme in your mother's name solely, presumably for a reason. Why should that discounted equity not (eventually) be used to satisfy any debt?

alun4

Just re-read. I have said "solely" - which you didn't say. In fact, you said "I own the house we shared". Could you please clarify

Artshot

When the house was purchased about 15 years ago, my mothers name and my own were on the agreement.

Hers was only ever there because I used her discount to buy the house, she never had any other financial responsibility for the house, now that she has gone, there's just me in the house.

g6jns_2

Artshot wrote: »

When the house was purchased about 15 years ago, my mothers name and my own were on the agreement.

Hers was only ever there because I used her discount to buy the house, she never had any other financial responsibility for the house, now that she has gone, there's just me in the house.

It sounds as if your late mother did have an interest in the house and this forms part of the estate. AFAIK only she had the legal right to buy the house but it depends on the exact terms the council imposed on the sale. What also puzzles me is how you got a mortgage in your sole name as building societies don't usually allow this. I suggest you consult a solicitor ASAP as the debtor may try to put a charge on the house. Is there a will?

dzug1

If your mother's name is on the deeds it's her house, not yours.


It will be very difficult though maybe not impossible to prove otherwise - so yes you need proper advice.

Crabapple

Your Mother's name is on the deeds and she will have an interest in the property at least to the value of the discount you obtained. Whether she paid anything towards the house while she lived in it is not really going to help.

The creditors will consider that she owns a share of the property (and in the absence of a deed setting out shares, it will be assumed as 50% of the equity). This means that her estate is more than the cash assets you propose to use to repay them.

I think your best option would be to pay the debts from your own cash to avoid your home potentially getting charges placed against it.

getmore4less

Was the house joint tenants or tenants in common?

If the latter was anything done to set the shares eg a test deed.

How much is the house worth.

Artshot

I think a few of the details are looking confusing, which is probably down to me.

The mortgage is in both our names, I just got a recent statement which confirms this.

Sorry for my ignorance, but what's the diffrence between Joint Tennants and Tennants in common ?

The house is worth about 90k

I am also in an IVA which stops me from selling the house until the IVA is finished in about 2 years.

WillowCat

This explains it fairly well:

"What if there's not enough money to pay outstanding debts?

In this case, the estate has to pay off any outstanding debts in a set order before anything is given to people named in the will, or until the money runs out.

• Dealing with a deceased person's money and property

Debts if you owned a home together

If you jointly owned your home and there's not enough money elsewhere in the estate to pay off the deceased person's debts, there is a chance that your home would have to be sold. Your options to avoid a sale depend on whether you owned it as 'tenants in common' or 'joint tenants'.
'Tenants in common'

If you were ‘tenants in common’, each of you owned a stated share of the property. The share belonging to the person who has died becomes part of their estate and goes to whoever is mentioned in their will. But if there are outstanding debts these must be paid first from that share.
To avoid a sale of the home, you and/or anyone due to inherit the second share will need to try to negotiate with those owed money ('creditors') and find the necessary money.
'Joint tenants'

If you were ‘joint tenants’, you owned the whole property together and the deceased person's share passes automatically to you.
But even though it's now in your estate, you can't ignore the debts. Creditors can apply for an 'Insolvency Administration Order' within five years of the death. This can have the effect of dividing the property in two and can force a sale. So it's in your interest to try to come to an agreement with people who are owed money, and try to pay them yourself.
Information as to whether you own the property as 'tenants in common' or 'joint tenants' may be shown in the Transfer or Lease by which you acquired the property or in a Trust Deed or in a Will. The land register may also provide a clue, but Land Registry cannot advise you on which kind of ownership you have chosen."


from http://www.nidirect.gov.uk/what-happens-to-debts-when-someone-dies


(It's a Northern Ireland site but I understand the same principles apply in England and Wales)


The summary is though that you should try to pay these debts out of your own money in order to secure your house for your future.

Marktheshark

If you are administering the estate you can really make and debt collectors jump hoops.
You can require them to cough up proof of the debt, signed credit agreements is the start, lists of payments. dates, accounts payments made from.
You have a legal duty not to pay those who can not prove they are owed.