Unsecured Debts. Can I negotiate with the lender to reduce debt amount?

Yorkshireman99

The general principle is that executor have a year to administer an estate including gathering in any debts payable to the estate and distributing the proceeds. Auctions fetch an open market value on the day that is perfectly fair. The reality is sellers often have expectations of value beyond what is achievable. I am not an estate agent but ask one and they will tell you that sellers often have an expectation far in excess of what is realistic. Such properties remain on the books for months or even years with no viewings with costs mounting up all the time. If the estate are spending £300 per month on the property then after seven months they are more than £2K worse off. The seller can always set a realistic reserve for an auction sale. How is a £50K property costing £300 per month in maintenance?

LondonGent

Manxman_in_exile wrote: »

Is that right? Maintenance costs of £300 per month on a £50,000 property?

Yes. You sound surprised.

The block the flat is in is run by a property management firm and they charge around 3.5k per year payable bi-annually. This does not include ground rent, council tax and rates, building insurance, electricity.

LondonGent

Yorkshireman99 wrote: »

Auctions fetch an open market value on the day that is perfectly fair.

"I got a really fair price for my property at auction"....said noone ever.

Yorkshireman99

craigedmonds wrote: »

Yes. You sound surprised.

The block the flat is in is run by a property management firm and they charge around 3.5k per year payable bi-annually. This does not include ground rent, council tax and rates, building insurance, electricity.

If the property is empty then there should be no council tax. If the estate waits a year to sell they are £3.5K down so dropping the price a bit makes sense. In any case £3.5k charges is absurd on a proerty worth £50K.

Yorkshireman99

Since anyone who wanted to bid could do so where do you think these non existent bidders were? Reality check needed.

LondonGent

Yorkshireman99 wrote: »

Since anyone who wanted to bid could do so where do you think these non existent bidders were? Reality check needed.

Sorry, you have completely lost me now.

getmore4less

Check the terms of the unsecured loan properly.

you need to know what the terms are for death of the borrower

FYI even secured debts are not limited to the security as it is in some US states, if the security fall short the debt still exists and that along with other debts can be turned into a charge on other assets.


Creditors often say you have to pay us now because inexperienced administrators or relatives just cough up the cash thinking they have to.

Creditors just have to wait, but not for ever, you have time to do a proper job.

the terms of the debt can continue but any further interest that accrues(should you fail to negotiate having that frozen) becomes a separate category of debt should the estate become insolvent.

Not a problem if there is just one creditor.

Other ongoing liabilities like those for a property you can also negotiate, deferment is a common request as it is expected that estates have cashflow issues.


I think you said that this main debt was with the bank that held the account with the cash, lucky they did not invoke any setoff clauses that are common with loans as they would have made that debt secured against those accounts.

You could well be trying to solve problems of our own making and lack of understanding

The property being where your focus should be.


Keeping all the info in one thread is far more productive, you can crosslink to get input from other places.

Most people won't go chasing round after you looking for potential relevant information you forgot to post in one thread.

LondonGent

getmore4less wrote: »

Check the terms of the unsecured loan properly.

you need to know what the terms are for death of the borrower

FYI even secured debts are not limited to the security as it is in some US states, if the security fall short the debt still exists and that along with other debts can be turned into a charge on other assets.


Creditors often say you have to pay us now because inexperienced administrators or relatives just cough up the cash thinking they have to.

Creditors just have to wait, but not for ever, you have time to do a proper job.

the terms of the debt can continue but any further interest that accrues(should you fail to negotiate having that frozen) becomes a separate category of debt should the estate become insolvent.

Not a problem if there is just one creditor.

Other ongoing liabilities like those for a property you can also negotiate, deferment is a common request as it is expected that estates have cashflow issues.


I think you said that this main debt was with the bank that held the account with the cash, lucky they did not invoke any setoff clauses that are common with loans as they would have made that debt secured against those accounts.

You could well be trying to solve problems of our own making and lack of understanding

The property being where your focus should be.


Keeping all the info in one thread is far more productive, you can crosslink to get input from other places.

Most people won't go chasing round after you looking for potential relevant information you forgot to post in one thread.

Thank you for what is essentially some sterling advice. Really very interesting and building my confidence now especially after your comment regarding coughing up becasue they think they have to.

securityguy

Yorkshireman99 wrote: »

If the property is empty then there should be no council tax. If the estate waits a year to sell they are £3.5K down so dropping the price a bit makes sense. In any case £3.5k charges is absurd on a proerty worth £50K.

It's perfectly possible in the case of sheltered-ish accommodation. In my city the going rate appears to be about £7k per annum service charge, pretty much independent of the notional value of the property. It includes all sorts of other stuff, of course, like cleaning and personal alarm monitoring and concierge and so on. But if the property is empty, it's still payable.

theoretica

What you say about the property makes me wonder if it might be better to get shot of it rapidly. The beneficiaries could pay the debts off themselves and inherit the property without the debt hanging over it - that you don't want to do that because of the maintenance costs and it would be a poor asset for you, says that it is equally a poor asset for the estate to have. I would be less happy pouring the estate's money into the property management firm and similar costs than to the debts.

If it costs 3.5k a year and you need to fund it sitting unsold for two years it will cost 1/7th of its putative value. So it will be as good to sell for £43k now as for 50k in two years, even without inflation. Plus not having the worries of it for another two years, and isn't council tax payable if it sits empty for more than 6 months? It will have a price at which it will sell rapidly - either through auction or otherwise - this almost certainly won't be the highest price it could fetch in the next two years, but might be the best financial option for the estate.