Advice on dealing with insolvent estate :-(

Mjal1979

Dealing with an insolvent estate U.K.

Hi everyone, hope you can help

My father passed away a couple of weeks ago and I’m now dealing with his estate 

I’ve gathered his debts together and his assets. 

He had 3 final salary pensions which have not left any money to his estate, he had no savings, valuables, no stocks etc. Basically, £200 in his bank

His house is worth about £75k but he owes £85k on it

He also has 3 credit cards that seem to be handled by debt companies to the tune of £9k, £4K and £3k

I’ve informed all his debtors of his passing and have sent death certificates etc. I understand that I need to apply for probate. But is it really worth it? Could I just advise all parties of the situation and let the house be repossessed? 

Obviously we don’t want to be liable for his debt.

Any advice or guidance much appreciated 

M

Gavin83

Walk away, don't deal with it. If you're named as an executor then renounce. You can let everyone know there's no one dealing with the estate if you wish but you certainly aren't obliged to.

JosephK

Sorry for your loss

As above. Don't touch it. You are not liable for any debts whatever any creditors might say. If you start administering the estate you may be deemed, legally, to have intermeddled and be stuck with the hassle.

Mjal1979

I had thought about that but what constitutes dealing with an estate?

so far I’ve 
- informed of his death
- closed his bank account etc
- filled out forms and sent back to HMRC for his pension and tax 
- asked fir the small amount of money in his bank to be sent to funeral directors 

Mjal1979

Also to add, he had no will 

TBagpuss

Simply telling people of his death,  or  arranging the funeral, aren't classed as 'dealing with the estate' so as to mean you can't stop. 

If the forms you filled out for HMRC and his pensions were simply to notify them if his death that shouldn't be an issue either. 
Was there any money in his bank accounts when you closed them, and if so, what happened to it? If there was, then even if it was only a small amount, that may well be classed as 'intermeddling' or dealing with the estate and make it hard to walk away. I think this may also be true if there was an overdraft and you paid it off - it certainly would be if you paid anything off from his money as that would be classed as paying a debt. I am not sure whether authorising them to pay any credit balance to the funeral home would be classed as doing so as the funeral costs would normally be the first call on the assets 

However, as he has a house and it appears to be in negative equity it may be that the way to go is to notify the lender f his death, let them know that to the best of your knowledge the estate is insolvent, there is no will,  and that they appear to be the largest creditor, and leave them to apply for letters of administration.

If you have gone to far to withdraw, then be aware that the main risk is that you could be personally liable if you distribute assets in the wrong order -in thus case, there is probably little risk of that as there don't appear to be any assets except the house, as the lender, having a secured mortgage, will have priority and there's likely to be nothing at all for any other creditors, but you may have to do a schedule of assets and liabilities to provide that to them, and deal with them hasssling you for payment even if they are not entitled to anything. 

I'd recommend that you speak to a solicitor, taking copies of the forms your completed and steps you've taken so far, and ask them to advise as to whether you have gone too far to withdraw, then proceed accordingly. 

Keep_pedalling

Simply write to his creditors explaining that the estate is insolvent and that no one will be administering it. In the case of the house, assuming that there is only one lender involved, I would include the house keys with the letter.

Sea_Shell

Keep_pedalling said:

Simply write to his creditors explaining that the estate is insolvent and that no one will be administering it. In the case of the house, assuming that there is only one lender involved, I would include the house keys with the letter.

In these circumstances, are you allowed to remove ANY personal possessions from the property first?

Not necessarily anything of value?

naedanger

Mjal1979 said:

I had thought about that but what constitutes dealing with an estate?

so far I’ve 
- informed of his death
- closed his bank account etc
- filled out forms and sent back to HMRC for his pension and tax 
- asked fir the small amount of money in his bank to be sent to funeral directors 

If the house is in negative equity (i.e. the mortgage holder won't recover their money) then I think you should not have arranged for the funeral to be paid from the small amount of money in his bank. I think secured debt ranks ahead of funeral expenses. (See link below)

That said, I have no idea of whether it will be a problem in practice. 

https://www.begbies-traynorgroup.com/articles/insolvency/what-is-an-insolvent-estate

Keep_pedalling

naedanger said:

Mjal1979 said:

I had thought about that but what constitutes dealing with an estate?

so far I’ve 
- informed of his death
- closed his bank account etc
- filled out forms and sent back to HMRC for his pension and tax 
- asked fir the small amount of money in his bank to be sent to funeral directors 

If the house is in negative equity (i.e. the mortgage holder won't recover their money) then I think you should not have arranged for the funeral to be paid from the small amount of money in his bank. I think secured debt ranks ahead of funeral expenses. (See link below)

That said, I have no idea of whether it will be a problem in practice. 

https://www.begbies-traynorgroup.com/articles/insolvency/what-is-an-insolvent-estate

Secured debts do come at the head of the queue, but only as on the asset the debt is secured on. Any shortfall is just another unsecured debt. 

naedanger

Keep_pedalling said:

naedanger said:

Mjal1979 said:

I had thought about that but what constitutes dealing with an estate?

so far I’ve 
- informed of his death
- closed his bank account etc
- filled out forms and sent back to HMRC for his pension and tax 
- asked fir the small amount of money in his bank to be sent to funeral directors 

If the house is in negative equity (i.e. the mortgage holder won't recover their money) then I think you should not have arranged for the funeral to be paid from the small amount of money in his bank. I think secured debt ranks ahead of funeral expenses. (See link below)

That said, I have no idea of whether it will be a problem in practice. 

https://www.begbies-traynorgroup.com/articles/insolvency/what-is-an-insolvent-estate

Secured debts do come at the head of the queue, but only as on the asset the debt is secured on. Any shortfall is just another unsecured debt. 

Thanks that makes sense now you say it.