Which debts do I pay

Foza

My father died 2 months ago and has left some debt, credit cards and loans. His house was owed and has automatically gone to my mum. He had his own bank account with a small sum but not enough to cover all his debt, he left no will. My question is how to decide which debts get paid, will I need to apply for probate. His account has been froze so the money is just sitting there.

Yorkshireman99

Foza wrote: »

My father died 2 months ago and has left some debt, credit cards and loans. His house was owed and has automatically gone to my mum. He had his own bank account with a small sum but not enough to cover all his debt, he left no will. My question is how to decide which debts get paid, will I need to apply for probate. His account has been froze so the money is just sitting there.

Any debts are due from the estate not you or your mum. The first thing to be paid is the funeral costs. How much is in the bank and how much are the debts?

Foza

The funeral was paid out of the life insurance my mother received, he had a loan with his bank and owed £5800 but only had £4300 in his account, he also has two credit card debts. Obviously he hasn't got enough to pay them all, so how do I determine who gets paid and who doesn't.

FreeBear

Foza wrote: »

The funeral was paid out of the life insurance my mother received, he had a loan with his bank and owed £5800 but only had £4300 in his account, he also has two credit card debts. Obviously he hasn't got enough to pay them all, so how do I determine who gets paid and who doesn't.

Chances are, if he had any money in a current/savings account, the bank would grab that money to offset against the loan (assuming both are with the same bank).

IF there is any funds left in the estate, the sensible thing to do is offer each creditor so many pennies in the pound as full and final settlement after paying out any priority debts (council tax being one).

By the sounds of it, the estate is insolvent, and the standard advice is to leave well alone and let the creditors apply for probate.

Keep_pedalling

His bank will definitely offset his debt against the money in his account, which actually makes life easier for you as his estate will have nothing to distribute. Probate will not be required as his main asset is held as joint tenants.

I would write to his creditors simply stating that the estate is insolvent and that neither you nor your mother is administering it.

Technically a creditor can force a house sale in these circumstances, but that is a costly option and they are unlikely to go down that road for small debts, as it is cheaper to right them off.

windsorian

I was very interested to find this thread, and I'm hoping that someone could give me some advice please. My estranged husband died a few weeks ago, and left nothing but debts, including his bank account. I arranged his funeral, which of course I will have to pay for, but now I am wondering what to do about his debts. His will left his half of the house (which I am living in) to me, as we are Tenants in Common. Without the house, his estate would be insolvent. Can creditors force me to settle his debts, as naturally I don't want to have to sell the house to release his equity? SSE, bless 'em, immediately wrote off his debt.
Our 2 sons were named as executors, but neither want to administer the estate, so I have done the Application for Probate. Does that make me liable for the debts?

Keep_pedalling

His estate is not insolvent as he owned half a house, so his creditors are entitled to be paid in full (assuming his share of the house is worth more than his depts), so yes if nessasarily they could force a sale if you cannot raise the funds yourself. Better if you can raise a secured loan than sell.

How much dept are we talking about, and what is the value of the house?

windsorian

Ah, so I'm correct in thinking that I am liable for his debts because of the house.

So far, including the funeral costs, and possible Income tax of around £1000, as HMRC want self assessment forms for 2 years, the amount owed is heading towards £8000. I had an estate agent round who estimated an open market value of £575k, so his share is approx £287k, of course far more than his debts.

Keep_pedalling

windsorian wrote: »

Ah, so I'm correct in thinking that I am liable for his debts because of the house.

So far, including the funeral costs, and possible Income tax of around £1000, as HMRC want self assessment forms for 2 years, the amount owed is heading towards £8000. I had an estate agent round who estimated an open market value of £575k, so his share is approx £287k, of course far more than his debts.

The first call on estates are the funeral costs follows by secured debt, then unsecured debt. As his main beneficiary you come after that.

Keep_pedalling

Make sure you place a notice in the gazette to protect yourself from unknown depts crawling out of the woodwork in the future.

https://www.thegazette.co.uk/place-notice

windsorian

Many thanks for your help. It looks as if I will have to ask creditors if they will accept me paying off the debts over the next few months to minimize the hit on me, though the funeral bill will have to be paid immediately. But you have answered my primary question as to whether I am liable for the debts without having to sell the house.
Ah, I wasn't aware of having to place a notice in the gazette. I will do that too. Thank you so much!