Can inheritance help with debt situation before it comes through? 4 July 2019 at 10:31AM edited 10 July 2019 at 9:16AM in Debt-Free Wannabe 12 replies 5.9K views

e_miij

After a series of bad decisions I am in a bit of a debt hole where I owe a few thousand pounds (across overdrafts, bank loans, payday loans, Argos card, and credit cards) and I am repaying over £300 a month which is really difficult as I only earn just above minimum wage.

I have been taking various steps to sort my finances out including moving to a new city next month where my rent will be roughly half of what it is now.

My father died about six weeks ago (aged 48, which has been absolutely devastating and incredibly difficult to cope with). I am the sole beneficiary and executor of his estate. He owned a house and other assets in total worth around £300,000. However there are complications so sorting out the estate won’t be a quick process. I can imagine it’ll be a year before I get that money in my account, at which point I’ll pay off my debts, buy a house outright and hopefully never be in debt again.

Is there anything I can do in the meantime to reduce my debt burden? Can I borrow against the estate at a reduced interest rate to reduce my monthly payments? Or any other solutions?

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Mojisola

e_miij wrote: »

My father died about six weeks ago (aged 48, which has been absolutely devastating and incredibly difficult to cope with).

I am the sole beneficiary and executor of his estate. He owned a house and other assets in total worth around £300,000.

I can imagine it’ll be a year before I get that money in my account

Have you asked the executors if they will do an interim payment that will let you pay off some (or all) of your debts?

If there is enough spare cash, they should seriously consider your request.

e_miij

I am the executor named in the will, I've hired a solicitor who's sorting out the probate and some other issues. I suppose I should ask my solicitor whether I can take some of the cash out of the estate straight away. I had asked another friend who used to be a solicitor whether that would be possible and she seemed to think it wouldn't be possible for a few months but I don't fully understand why. I'll ask my actual solicitor.

iolanthe07

The reason executors are reluctant to release funds until probate has been granted is that they can't be absolutely sure what debts will have to be paid out of the estate. There have been cases where executors have had to cough up out of their own money to pay debts on the estate that weren't immediately apparent.

Mojisola

e_miij wrote: »

I am the executor named in the will, I've hired a solicitor who's sorting out the probate and some other issues. I suppose I should ask my solicitor whether I can take some of the cash out of the estate straight away. I had asked another friend who used to be a solicitor whether that would be possible and she seemed to think it wouldn't be possible for a few months but I don't fully understand why. I'll ask my actual solicitor.

Probably because you'll need to wait for probate to come through before distributing any money - once that's through and if there is money available, do an interim payment.

Don't leave the estate sort of funds - there will be all sorts of expenses before the property is sold.

Larac

We did an interim payout around six months after my Mum's death. My brother was Executor of the will and by that time had a handle of the 'Estate P&L' She had quite significant cash + property - we agreed on an amount but also left in the bank a sum to cover sale of the flat, conveyancing, service charges and Council Tax as you become liable to pay this at the full rate after six months following grant of probate. ( In our case we left 3 years of running costs for the flat in the account as we had a retirement flat to sell which are notoriously difficult to sell)

markandkate

If you can get an interim payment, and you should be able to if there is cash as well as property, then you should negotiate a percentage offer in full and final settlement rather than paying the full amount. You would say that you have received a small inheritance which may cover some debts but not in full and make an offer of say 60% of the debt and see what they say

Bellisima

I would ask your solicitor. He/she must come across this sort of thing often. It does take a while to sort the Probate, but the biggest delay may be trying to sell the house, or it was in our case. Took 10 months to sell my dear mums house.

anniecave

markandkate wrote: »

If you can get an interim payment, and you should be able to if there is cash as well as property, then you should negotiate a percentage offer in full and final settlement rather than paying the full amount. You would say that you have received a small inheritance which may cover some debts but not in full and make an offer of say 60% of the debt and see what they say

I'm sorry for your loss.

I wouldn't recommend lying to any lenders. I would feel free to ask about full and final settlement offers as they may settle for less than the full amount but I wouldn't say that I am due to receive only a small amount if the amount is actually due to be paid is more than enough to pay off the debts.

Takmon

markandkate wrote: »

If you can get an interim payment, and you should be able to if there is cash as well as property, then you should negotiate a percentage offer in full and final settlement rather than paying the full amount. You would say that you have received a small inheritance which may cover some debts but not in full and make an offer of say 60% of the debt and see what they say

Why would they want to have a negative marker on their credit report by only paying off part of the debt when the total is only a few thousand?

ChasingButterflies

Really sorry to hear of your recent loss.

Have you had the opportunity to check and see if there is any pensions and or life insurance? These don’t normally for part of the estate and can be released to beneficiaries before the will is finalised. Just a thought.