Dealing with debts

sweenster

Sadly my mum passed away a few days ago.

I will be acting as executor on the estate, which amounts to a house (worth maybe £40-50k in current condition, that she wants to leave to my sister) and insurance policies worth about £42k, after deducting funeral and other costs.

She also has secured debts of £26k, and unsecured debts of £38k. The unsecured portion has been frozen for more than 10 years, and the largest balances sold on to collection companies (Cabot etc).

So essentially there is enough there to pay the debts in full, assuming I take over the secured portion myself. Alternatively, if I cleared the secured debts, it leaves about £16k to try and split between the others - assuming they accepted this position.

Questions:
a) Cabot sent out offer letters recently offering to settle for 30% of their balances. Can I reasonably expect them to still accept 30%, or will they go chasing the entire balance once I disclose the entire assets of the estate?

b) One of the account is about £13k borrowed from Northern Rock, which is now assigned to Mortimer Clarke. I can find no paperwork to support this assignation - I only know because the repayments go to their account per the bank statements. Again, is it worth approaching them over settling for less? Or allow the payments to stop and wait until they chase?

c) There are smaller amount from old credit cards, eg M&S, of about £1200 each - is it worth approaching them and requesting that they write if off?

Thanks

FreeBear

Before making any offer to settle debts, make them prove that the money is actually owing. If Cabrot are offering a discount, it is pretty much guaranteed that either the debt is unenforcible (statute barred), or they don't have the paperwork.

Don't tell any of them how much the estate is worth - If they want to know, they can get the information from the Probate Registry after the probate application has gone through.

As there are debts that you already know about, it would be advisable to place an advert in the London Gazette just to cover your back as an executor.

Savvy_Sue

I am sorry for your loss. Absolutely agree with Freebear, I'd want to be very sure this wasn't going to be an insolvent estate.

Is there a will? You say:

sweenster wrote: »

I will be acting as executor on the estate, which amounts to a house (worth maybe £40-50k in current condition, that she wants to leave to my sister)

Either there is a will leaving the house to your sister, or there is not a will leaving the house to your sister. Your mother's wishes are only valid in so far as she set them out in a will.

BUT

there is a 'does not compute' alarm ringing with what you say next

sweenster wrote: »

a house (worth maybe £40-50k in current condition, that she wants to leave to my sister) and insurance policies worth about £42k, after deducting funeral and other costs.

She also has secured debts of £26k, and unsecured debts of £38k. The unsecured portion has been frozen for more than 10 years, and the largest balances sold on to collection companies (Cabot etc).

So essentially there is enough there to pay the debts in full, assuming I take over the secured portion myself.

Why would you do that?

sweenster wrote: »

Alternatively, if I cleared the secured debts, it leaves about £16k to try and split between the others - assuming they accepted this position.

Who are 'the others'? If there is a will, what has been left to them? If there is no will, you have to follow the rules of intestacy.

But more to the point, I do not see how your sister can have the house if Mum's estate still clears the debts. Even if the house has been left to her in the will, any debtors could reasonably expect the house to be sold to pay valid debts.

Yorkshireman99

FreeBear wrote: »

Before making any offer to settle debts, make them prove that the money is actually owing. If Cabrot are offering a discount, it is pretty much guaranteed that either the debt is unenforcible (statute barred), or they don't have the paperwork.

Don't tell any of them how much the estate is worth - If they want to know, they can get the information from the Probate Registry after the probate application has gone through.

As there are debts that you already know about, it would be advisable to place an advert in the London Gazette just to cover your back as an executor.

How can probate be done without accounting for the debts? The OP needs to make sure they don't administer a insolvent estate. The OP has no liability for any of the debts. If the OP is unsure then they needs urgent advice from the CAB or a solicitor before doing anything else.

-taff

The debts have to be paid first, because if you act as an excecutor and don't pay them, you become liable for them.

Think carefully about what you're doing before you do anything. Do as suggested above with the prove it letters, and the london gazette.

What is the secured debt? Is it a mortgage, or is it a charge on the house?


Don't even think about sharing out any monies to anyone until you know the full extent of what's owed and to whom.

Again, think about this carefully before you do anything.

Keep_pedalling

If the insurance policies were written in trust to be paid to specific people it does not form part of her estate, which just leaves the house.

You should not be taking on any depts, and anyway it is likely that the lender of the secured debt will want it settled, so the house is will probably need to be sold.

sweenster

Thanks for the various pieces of advice. I understand how the process works and I'm financially literate, and I've engaged a solicitor (in Scotland, there's no will and I need to apply to the court to be appointed executor) I just don't have any experience of what I might expect from these assigned unsecured debts, hence the specific questions in the OP.

sweenster

Yorkshireman99 wrote: »

How can probate be done without accounting for the debts? The OP needs to make sure they don't administer a insolvent estate. The OP has no liability for any of the debts. If the OP is unsure then they needs urgent advice from the CAB or a solicitor before doing anything else.

It's clearly not insolvent from the numbers I have quoted. I am taking advice. At this stage, I only need provide an inventory of assets.

-taff wrote: »

The debts have to be paid first, because if you act as an excecutor and don't pay them, you become liable for them.

Think carefully about what you're doing before you do anything. Do as suggested above with the prove it letters, and the london gazette.

What is the secured debt? Is it a mortgage, or is it a charge on the house?


Don't even think about sharing out any monies to anyone until you know the full extent of what's owed and to whom.

Again, think about this carefully before you do anything.

No I won't be distributing anything. The secured debt is a mortgage. The bank spoke in terms which suggested they assumed that a member of family would take over the mortgage (or more accurately, take out a new mortgage to the value of the existing one), rather than the debt being cleared from cash/insurance in the estate.

Keep_pedalling

Be careful, if those insurance policies do not form part of her estate the estate will be insolvent (unless those unsecured debts are uninforcable), in which case you should walk away and let the creditors sort it out.

Yorkshireman99

-taff wrote: »

The debts have to be paid first, because if you act as an excecutor and don't pay them, you become liable for them.

Think carefully about what you're doing before you do anything. Do as suggested above with the prove it letters, and the london gazette.

What is the secured debt? Is it a mortgage, or is it a charge on the house?


Don't even think about sharing out any monies to anyone until you know the full extent of what's owed and to whom.

Again, think about this carefully before you do anything.

It is not as clear cut as that. It depends for a start if there is a will and who the executor is.

sweenster

Keep_pedalling wrote: »

Be careful, if those insurance policies do not form part of her estate the estate will be insolvent (unless those unsecured debts are uninforcable), in which case you should walk away and let the creditors sort it out.

There's no reason they wouldn't. There's no reason she'd be putting them in trust or anything else. It's all part of the estate. It seems likely that she thought the 'debts would die' and we'd get to share the proceeds of the policies though.