Debt - Philips and Cohen

Keep_pedalling

A lot of companies use Philips and Cohen to handle the accounts of deceased customers, which seems to be something they specialise in. You should find that they a professional and are used to handling bereaved relatives so you should not find yourself being harassed.provided you respond to to their correspondence appropriately. 

As others have said you mother’s estate is solvent so the debt will need repaying, if you inform Philips and Cohen that you need probate to erase funds that will give you more time, although nothing to stop you paying earlier if you wish too.

macman

Have you established that the debt is a valid claim? How old is it? if yes, then as executor you are obliged to discharge the debts before you distribute any assets.
Living in the property, even for decades, does not make it yours in any way. Until probate is obtained and title transferred, it is the property of the estate. 

AttractingMoreMoney

I thought there was a difference between secure and unsecure debt and that the latter couldn't necessarily be automatically reclaimed. 

Anyway, thank you everyone for responding. 

Keep_pedalling

AttractingMoreMoney said:

I thought there was a difference between secure and unsecure debt and that the latter couldn't necessarily be automatically reclaimed. 

Anyway, thank you everyone for responding. 

Unsecured debt certainly drops down the pecking order, secured debt comes first, funeral costs second but it still comes ahead of bequests which are last in line.

user1977

AttractingMoreMoney said:

I thought there was a difference between secure and unsecure debt and that the latter couldn't necessarily be automatically reclaimed. 

It doesn't make a difference if the estate is large enough to cover all of the debt - it all needs to be paid.

macman

AttractingMoreMoney said:

I thought there was a difference between secure and unsecure debt and that the latter couldn't necessarily be automatically reclaimed. 

Anyway, thank you everyone for responding. 

As Executor, you have a duty to discharge all the debts before releasing any bequests. It's irrelevant if the debt is secured or unsecured-it's still a liability of the estate.
If you fail to do this, you could be held personally liable for any outstanding debts that remain once the estate is liquidated. If the house were the only asset, it would need to be sold to clear the debt: luckily this is not the case with you.
Debts are not just voided upon death.

Sea_Shell

AttractingMoreMoney said:

fatbelly said:

Why did you prioritise the bank loan?

You are not personally liable but as an executor you have a responsibility to treat all creditors equally

P&C could create problems here. Whether they would or not remains to be seen. 

This was because when the bank closed the account they took the loan amount out before transferring the rest to pay the funeral costs.

Just to clarify, the loan was with the same bank as the account.

Just thinking about this point.


Are banks entitled to offset in these circumstances?

They are, in effect, making themselves a preferential creditor, against any other debts an estate may have.

Keep_pedalling

Sea_Shell said:

AttractingMoreMoney said:

fatbelly said:

Why did you prioritise the bank loan?

You are not personally liable but as an executor you have a responsibility to treat all creditors equally

P&C could create problems here. Whether they would or not remains to be seen. 

This was because when the bank closed the account they took the loan amount out before transferring the rest to pay the funeral costs.

Just to clarify, the loan was with the same bank as the account.

Just thinking about this point.


Are banks entitled to offset in these circumstances?

They are, in effect, making themselves a preferential creditor, against any other debts an estate may have.

Yes they are allowed to do this. 

Sea_Shell

Keep_pedalling said:

Sea_Shell said:

AttractingMoreMoney said:

fatbelly said:

Why did you prioritise the bank loan?

You are not personally liable but as an executor you have a responsibility to treat all creditors equally

P&C could create problems here. Whether they would or not remains to be seen. 

This was because when the bank closed the account they took the loan amount out before transferring the rest to pay the funeral costs.

Just to clarify, the loan was with the same bank as the account.

Just thinking about this point.


Are banks entitled to offset in these circumstances?

They are, in effect, making themselves a preferential creditor, against any other debts an estate may have.

Yes they are allowed to do this. 

Doesn't that potentially put an executor in a tricky position though?

Or because it's out of their hands they can't be deemed to have mishandled an estate, especially if it's otherwise insolvent?  (Not that this case is, but generally)

Keep_pedalling

Sea_Shell said:

Keep_pedalling said:

Sea_Shell said:

AttractingMoreMoney said:

fatbelly said:

Why did you prioritise the bank loan?

You are not personally liable but as an executor you have a responsibility to treat all creditors equally

P&C could create problems here. Whether they would or not remains to be seen. 

This was because when the bank closed the account they took the loan amount out before transferring the rest to pay the funeral costs.

Just to clarify, the loan was with the same bank as the account.

Just thinking about this point.


Are banks entitled to offset in these circumstances?

They are, in effect, making themselves a preferential creditor, against any other debts an estate may have.

Yes they are allowed to do this. 

Doesn't that potentially put an executor in a tricky position though?

Or because it's out of their hands they can't be deemed to have mishandled an estate, especially if it's otherwise insolvent?  (Not that this case is, but generally)

Not really, if the estate is insolvent then you really should not even attempt to administer it, but if you did then there is no need to declare the offset dept just the net value held / owed with the bank.