Debt management company - Dad has died

Lgas

Hi all, my seemingly fit and healthy beloved dad suddenly passed away mid September, with no life insurance, not even enough money in his account to pay for the funeral. No savings or anything like that. He didn’t pay the annuity on 2 of his pensions so no payout but one has finally been paid out to my mum, his wife of 36 years. (A lump sum of £52,000). The mortgage repayments alone are over £1000 a month so this money is essential. The mortgage has since been transferred to mum’s sole name.

Since then we have realised that he was in a debt management plan to the tune of around £40,000 owed, and they are sending Dad letters still, so aren’t aware that he has passed away. My mum is scared to contact them. She’s had letters from Harrington Brooks and Westcott.

Will my mum be liable for this debt? Will it be taken out of the proceeds of the house (which is for sale but may take some time, and Mum needs to buy another smaller house for herself with the proceeds)?

This has all been a huge shock as he wasn’t someone who wasted money or was frivolous- it would have been just to stay afloat with the bills, but he never told any of us.

Thank you.

Yorkshireman99

Your mother is not liable for the debt. Whose name was the house in at the date of death? The debt management company must be told ASAP. It sounds as if the estate is insolvent. Was there a will?

Keep_pedalling

You need to contact Harrington Brooks first thing on Tuesday morning to inform them of the death. They are a dept management company not dept collectors.

The money from the pension fund should be safe, but some equity in the house could be at risk. If owned as tenants in common then his share of the equity should go to pay his creditors. Even if held as joint tenants there is a risk that a creditor could apply to the courts for a insolvency administration order to retrieve the debt. That is unlikely if he owes lots of people a small amount of money, but if anyone is owed a large amount it is more likely.

Has probate / letters of administration been applied for?

Lgas

Thank you both, at the time of death the house was in both of their names. There was a will, my mum, my eldest brother and I are executors of the estate, my mum has never paid for the bills in their whole marriage so we have sorted that out for her, there was around £2000 wages in his current account which was transferred to mum’s account (she had to use her credit card to pay for the funeral which has now been paid off using the pension money).

I’ve just remembered, she has since sold one of their fields for £42,000 (before fees) which is due to complete soon, I wonder if they would try to claim this money? She sold this in a hurry in case there was no pension payout, in order to pay the bills, as it took a few months to be paid out. I believe the debt is probably credit card(s) and loans, but we haven’t been able to find out on our own.

A week before his death when all was well he told my mum his life insurance had expired last year (at 65) but assured her she would be fine if the worst happened - I don’t think he even realised that his other pensions (Scottish widows being one) wouldn’t pay out to her.

There is still a mortgage of £97,000 remaining on the house.

worried_jim

If he has pensions savings then it would go to the estate (your Mum), what have Scottish Widdows told you?

getmore4less

As executors you need to go back to basics and do an inventory and account of all the assets and debts of your father.

Checking carefully the ownership of all property assets as it seems there is more than just a house if "she has since sold one of their fields"

Ownership of these may be crucial as there are potential CGT liabilities that get complicated if one owner dies.

For the debts the DM company should help but sometime they just wash their hands of anything once a client dies and you have to do digging through paperwork or wait for the letters to arrive from creditors.

The DM company are a fee paying one and quite expensive for DMP, That may need investigating.
https://www.harringtonbrooks.co.uk/terms/financial-management-plans/


There is also a chance that not all creditors would have been included in the DMP so there very good reason to consider a section 27 notice.

Lgas

worried_jim wrote: »

If he has pensions savings then it would go to the estate (your Mum), what have Scottish Widdows told you?

They said there was no annuity paid on the pension so it doesn’t go to anyone in the event of his death.

Lgas

getmore4less wrote: »

As executors you need to go back to basics and do an inventory and account of all the assets and debts of your father.

Checking carefully the ownership of all property assets as it seems there is more than just a house if "she has since sold one of their fields"

Ownership of these may be crucial as there are potential CGT liabilities that get complicated if one owner dies.

For the debts the DM company should help but sometime they just wash their hands of anything once a client dies and you have to do digging through paperwork or wait for the letters to arrive from creditors.

The DM company are a fee paying one and quite expensive for DMP, That may need investigating.
https://www.harringtonbrooks.co.uk/terms/financial-management-plans/


There is also a chance that not all creditors would have been included in the DMP so there very good reason to consider a section 27 notice.

Thank you, the house is a large 5 bedroom house with 11 acres of land, Mum has sold one 4.88 acre field and the remaining land is being sold with the house, she has had an informal offer way under the sale price pending electrical tests so we are waiting to hear if they wish to continue with this. I don’t know why he wasn’t in more of a rush to sell the house when he was alive (it was always the plan to downsize and sell and move to where me and my brothers live, 230 miles away) given the debts and the high mortgage payments!

Yorkshireman99

Lgas wrote: »

Thank you, the house is a large 5 bedroom house with 11 acres of land, Mum has sold one 4.88 acre field and the remaining land is being sold with the house, she has had an informal offer way under the sale price pending electrical tests so we are waiting to hear if they wish to continue with this. I don’t know why he wasn’t in more of a rush to sell the house when he was alive (it was always the plan to downsize and sell and move to where me and my brothers live, 230 miles away) given the debts and the high mortgage payments!

Was the house held as joint tenants or tenants in common. Your mother cannot seel th land until probate is granted. I suggest you get paid for professional advice before you get is a bigger mess. Some of the debt will probably have to be paid out of the estate.

Lgas

Yorkshireman99 wrote: »

Was the house held as joint tenants or tenants in common. Your mother cannot seel th land until probate is granted. I suggest you get paid for professional advice before you get is a bigger mess. Some of the debt will probably have to be paid out of the estate.

I’m not sure of the difference..all I know is they jointly owned the land and property together, and as executor I was asked to sign the sale documents as the land must still be in 2 names and i’m a beneficiary? The will has been released and solicitors have been dealing with the land sale, would they not have brought it up if she wasn’t able to sell the land?

Crabapple

Land in joint names can be sold without a Grant of Probate, just a death certificate.

Whether it is held as joint tenants or tenants in common will make a difference to whether the sale proceeds are automatically available to creditors.