Personal Loan Question

[Deleted User]

Hi,

oh, bit confused,

Also, as the house is still mortagaged and there is no insurance policy to pay the mortgage off

so, what happens to the house if your mother dies, didn't know you could get a mortgage without some 'insurance'.

jamesd

matrix999, glad to read that you got a good result there, even if it is exactly the opposite of what the government documents say happens!

frugalmacdugal, you have to have buildings insurance to protect the value of the property that is security for the loan. You don't have to have other insurance like life insurance, though this situation shows why it can be a good idea.

Debt_Free_Chick

matrix999 wrote: »

Having spoken with the CCCS regarding this debt I have been advised that my mother is not responsible for the debt as she never signed the credit agreement. Also, as the house is still mortagaged and there is no insurance policy to pay the mortgage off there is no estate to pay the personal loan.

Yes - it's true that debts will be written off where the estate has no assets. But I'm confused.... earlier you posted

My mum is currently waiting on a payout from my dad's life insurance, which i think is about 20k...

So there IS an insurance policy .... is there?

And you're sure that this policy goes direct to mum and not the estate ....?

matrix999

Debt_Free_Chick wrote: »

Yes - it's true that debts will be written off where the estate has no assets. But I'm confused.... earlier you posted



So there IS an insurance policy .... is there?

And you're sure that this policy goes direct to mum and not the estate ....?

Yes, there is an life insurance policy that is paid directly to my mum and as my mum never signed a credit agreement for the personal loan my dad took out she is not liable for the debt.

iolanthe07

Yes, there is an life insurance policy that is paid directly to my mum and as my mum never signed a credit agreement for the personal loan my dad took out she is not liable for the debt.

I'm pleased for your Mum, but I don't really understand this. Surely your Dad's estate is liable for the debt?

matrix999

iolanthe07 wrote: »

Yes, there is an life insurance policy that is paid directly to my mum and as my mum never signed a credit agreement for the personal loan my dad took out she is not liable for the debt.

I'm pleased for your Mum, but I don't really understand this. Surely your Dad's estate is liable for the debt?

Aparently not, as the bank is in the process of writing off the debt.

Debt_Free_Chick

matrix999 wrote: »

Aparently not, as the bank is in the process of writing off the debt.

oooooooo..... let's get this clear, in case others rely on this thread in the future.

The estate IS responsible for the debt. The bank could simply contact the executor and request repayment. If there are sufficient assets, then the executor must pay the bank.

In this case, the bank have chosen not to seek repayment of the debt. Quite why, we do not know. But I rather suspect that in view of the small amount involved, they've chosen to write it off as a matter of goodwill. They probably have a threshold, below which they don't bother to seek repayment, as the time and effort involved outweighs the amount concerned.

No-one is responsible for anyone elses debts - ever - provided the debt is solely in the name of the person concerned (your dad, in this case). The situation is entirely different where the debt is in joint names i.e. as two or more people signed the credit agreement.

In that case, each person is completely responsible for 100% of the debt. So, on the death of one party, the other person is responsible for maintaining the repayments - although they could possibly make a claim on the estate, for the deceased's share.

The bank has written this off as a goodwill gesture. Legally, they could have pursued the estate for repayment.

HTH

matrix999

Debt_Free_Chick wrote: »

oooooooo..... let's get this clear, in case others rely on this thread in the future.

The estate IS responsible for the debt. The bank could simply contact the executor and request repayment. If there are sufficient assets, then the executor must pay the bank.

In this case, the bank have chosen not to seek repayment of the debt. Quite why, we do not know. But I rather suspect that in view of the small amount involved, they've chosen to write it off as a matter of goodwill. They probably have a threshold, below which they don't bother to seek repayment, as the time and effort involved outweighs the amount concerned.

No-one is responsible for anyone elses debts - ever - provided the debt is solely in the name of the person concerned (your dad, in this case). The situation is entirely different where the debt is in joint names i.e. as two or more people signed the credit agreement.

In that case, each person is completely responsible for 100% of the debt. So, on the death of one party, the other person is responsible for maintaining the repayments - although they could possibly make a claim on the estate, for the deceased's share.

The bank has written this off as a goodwill gesture. Legally, they could have pursued the estate for repayment.

HTH

I think that sums it up exactly!!

Debt_Free_Chick

A good result for mum, I think as it must be a worry.

Good on the bank too, as it does seem a little petty to be chasing such a small amount. Although the shareholders might not be too pleased about it

Having said that, the shareholders would surely agree that tying up debt recovery and legal departments for months is hardly good use of resources.

Good result all round - and a useful thread for others who might be faced with a similar situation.

Well done you for simply contacting the bank and asking them.

As we often say on MSE - don't ask, don't get