Debt after death

MobileSaver

An elderly relative has passed away leaving behind a couple of unsecured debts that were being managed by Stepchange. The original debts were from well over a decade ago and they've been paying two debt collection companies monthly for some time so there is now just a three figure and a small four figure outstanding balance.

The issue is that there's little money in the bank and the only income was pensions which have now of course stopped so the estate doesn't have the available funds to continue with the monthly payments. The relative did however own their home so there will be sufficient funds when that eventually sells but that will not be until next year at the very earliest.

1. Are debt companies sympathetic to bereavements and happy to wait for probate/house-sale or will they start adding interest/fees for breach of the DMP?
2. Are they likely to be interested in a discounted settlement offer for me to pay off the balance now and the estate reimburses me next year?

Does anyone have experience or other suggestions as to options available?

Grumpelstiltskin

It is the estate that is responsible not you.

Contact Stepchange and tell them there is no money available at the moment, leave it at that and see what they say, don't mention there may be money next year.

MobileSaver

Grumpelstiltskin said:

It is the estate that is responsible not you.

Agreed but the family are not rich so if I can help them to avoid additional fees/interest that will need to be paid out of the estate then I'm happy to do so.

Grumpelstiltskin said:

Contact Stepchange and tell them there is no money available at the moment, leave it at that and see what they say, don't mention there may be money next year.

Stepchange have been contacted and simply forwarded details of the two DMPs in place.

Keep_pedalling

The executor just needs to write to the creditors to inform then of the death, and inform them that the debts can only be paid after probate has been obtained and the house has been sold.

fatbelly

I agree. Play this with a straight bat.

If the estate has enough money to settle these after funeral costs, it should do so.

The executor/personal representative should make a list of creditors and balances and respond to any queries from creditors. No-one else should get involved

In the meantime no-one should be making any payments.

ManyWays

The executor/personal representative can also ask the creditor for a copy of the Consumer Credit Act Agreement for the debt. If it cant be found which is often the case for very old debts then the debt is unenforceable and the estate doesnt need to pay it. See https://nationaldebtline.org/get-information/sample-letters/information-about-your-agreement-under-consumer-credit-act/ and National Debtline will be able to tell you how to amend that letter to reflect the fact you are the executor/ personal representative. 

Rob5342

I'd be careful with that. If they produce it later and the executor has already distributed the funds then the executor would be liable for settling the debt.

MobileSaver

fatbelly said:

If the estate has enough money to settle these after funeral costs, it should do so.

There won't even be enough in the bank to pay for the funeral but I'll cover that cost for now if the funeral director won't wait until after probate/sale.

fatbelly said:

In the meantime no-one should be making any payments.

Thank for re-iterating and you're right, as tempting as it is to just pay them off and be done with it.

Rob5342 said:

I'd be careful with that. If they produce it later and the executor has already distributed the funds then the executor would be liable for settling the debt.

Agreed, it's an angle but wouldn't be ideal as the Administrator would need to hold back the disputed fees for six (?) years before distributing them. 

However if a CCA couldn't be produced then that perhaps may encourage the debt company to offer a significant settlement discount which would be good news for the family.

Grumpy_chap

MobileSaver said:

there is now just a three figure and a small four figure outstanding balance.

The relative did however own their home so there will be sufficient funds when that eventually sells

There are small debt relative to the value of the Estate.
Being an Executor is stressful enough without worrying about finding ways around clearing bills that, in the grand scheme of things, are going to have negligible overall impact.
Simplest thing is to be wholly honest and for the Executor to contact the debt owners advising no liquid assets but settlement will be concluded after probate and property sale.  Request interest freeze in the meantime.

MobileSaver

Grumpy_chap said:

MobileSaver said:

there is now just a three figure and a small four figure outstanding balance.

The relative did however own their home so there will be sufficient funds when that eventually sells

Request interest freeze in the meantime.

That's the unknown and the crucial bit; if the creditor agrees to an interest/fee freeze then all well and good but if not then I'll look at other options.
I agree it's a small debt relative to the Estate value although it's probably not as small as you might think. The property is in a cheap part of the country and similar houses in good condition are well under half the national average; this particular property is in very poor condition and I guess the net Estate will be low five figures when everything is paid off hence trying to minimise unnecessary outgoings as much as possible.

Rob5342

You'd be losing out on earning your own interest if you paid them earlier, which could get a bit messy when splitting the interest saving, especially if their are other creditors with claims against the estate. I'd keep it as simple as possible and just follow the standard approach of clearing the debts with what's left after funeral costs. If I could save money by acting as the estate I would, but I wouldn't involve my own money, unless I had to to cover funeral costs etc. It's going to take a lot of time and effort as it is.

The debts could have defaulted in which case there wouldn't be any interest or fees anyway. Even if there are it's only a few hundred pounds out of £x0,000, your efforts are better spent trying to get a bit extra for the house.