Insolvent Estate and Renounce Ex

Arnold03

Hello I’m writing for some advice.

My husband unexpectedly passed away 2 weeks ago (we are due to register death today) 

His business went into liquidation in December and this is all being wrapped and and closing and taken care of. As such we moved out of our family home into rented accommodation (tenancy in my name him as a permitted tenant with our two children) 

He put our family home up for sale as he wanted to clear the mortgage (approx 250k)  - and there is a funding circle loan with personal guarantee of approx 115k the house was valued at £400k so the equity after fees should have cleared his debt and then he would have a fresh start. The house hasn’t sold despite-it’d it being reduced to £365k …. Before he passed two further creditors also said he £10k owed to local council as the business lease was in his name not the business and £10k on a work van with a personal guarantee (hence fell outside of the liquidation process) 

he had no savings, pension and no life insurance, in recent months only on benefits … so at beginning of April he realised that he would make himself bankrupt as no way to pay the debts, and even if house sold after fees there would be a shortfall. So he completed bankruptcy forms, paid the money and thought that would all be happening. He passed two weeks ago it’s only now we realised he did not log back into and SUBMIT the bankruptcy forms 🥲

so we now have this to deal with… there is a basic will of which my daughter and I are named as executors.  So reasearching amongst our grief it would seem that we could apply for  “As an alternative, PRs may relief themselves of a responsibility for administering an insolvent estate by applying for an Insolvency Administration Order (IAO).  The application is made by a petition (in relation to which a court fee is payable).   Following issue, a hearing of the petition is scheduled and an Insolvency Administration Order (IAO) is issued.” And that this will then fall to OR to sort like the bankruptcy had he been alive.

my worries are this… I don’t know how easy it is to petition for an IAO and by doing so are we then accepting that we are exeucutirs and run the risk of making mistakes.

or if we renounce by filling in the PA15 form, and then just leave it to the creditors to apply?

to be honest there is nothing for me or the babies other than finding a new way forward, and I just don’t want to take on anything and do it wrong.

What can I do? 

Flugelhorn

I honestly don't know about this but can we just send you and your children a virtual hug and hope things get better for you in the future

RAS

Sorry you are faced with this very difficult situation on top of your bereavement. 

I think there may be one or two people who help on the bankruptcy subforum who may be able advise like @Minkym00 ?

Keep_pedalling

Was the family home owned in his name alone? If you owned it jointly with your husband then you can’t simply walk away from it as it makes things far more complicated. 

If he owned the house in his name only then yes you can renounce and write to his creditors informing them that his estate is insolvent and that you are not administering it. The biggest creditor! (the mortgage company) will then have to take on the task to manage the estate. 

Devongardener

So sorry that you have to deal with this in the middle of your grief.  You really need some legal advice on how to proceed, some solicitors offer a free 30 minute consultation before committing to any work.  In the meantime don’t engage with any of the creditors other than to inform them of your husband’s death, if pressed tell them you are reviewing the status of the estate.   Do you jointly own the house?

Arnold03

Keep_pedalling said:

Was the family home owned in his name alone? If you owned it jointly with your husband then you can’t simply walk away from it as it makes things far more complicated. 

If he owned the house in his name only then yes you can renounce and write to his creditors informing them that his estate is insolvent and that you are not administering it. The biggest creditor! (the mortgage company) will then have to take on the task to manage the estate. 

Only his name : nothing in mine at all.

when I looked up renouncing  it would seem my daughter and I fill in a PA15 form but it then says to give this to the person who wants to execute… 

who do we give it to? Do we need to formally register the completed form  or do we simply fill it in get it signed then send copy to mortgage company ? 

Sorry for the questions but I’m so anxious not to make a mistake: 

Do we write to all four creditors to advise of death and that estate is insolvent and that we are not administering it (do we include copy of PA15 to all?) 

or just to mortgage company and let them know about the 3 other creditors? 

By doing this to conform we are not intermeddling ? (I have the info of creditors from his bankruptcy completed form (although not submitted as per original post) 

Today we are due to register the death and I am in a real mess, if we use the tell us once service and write to his two bank accounts to inform of death (he has 2 unsecured lenders as well) is this intermeddling. 

I’m so sorry for the questions. 

Keep_pedalling

If you jointly owned your home as joint tenants then you can still walk still walk away from administering his estate as ownership of the house passes to you by survivorship and it does not require probate for you to sell it as you are already the sole owner. In theory his unsecured creditors could go to court to get the tenancy severed and pursue his share of the equity but that rarely happens because of the costs it involves a the likelihood of failure.

If you jointly owned the home as tenants in common you can still sell the home without probate but you will have to administer the estate as you will have to use his share of the equity to pay off some of his unsecured debt on a proportional basis so you have to be very careful how you do this. 

Arnold03

@Keep_pedalling it’s not jointly owed. Solely his.

Keep_pedalling

Arnold03 said:

@Keep_pedalling it’s not jointly owed. Solely his.

Thank you for the clarification.

Someone is going to need to obtain probate in order to sell the house, so first off I would write to the mortgage provider, informing them of his death and that you believe his estate is insolvent and that you are renouncing your powers of executorship. As a major secured creditor they will gave no choice but to apply for probate. Include a copy of his death certificate, a copy of his will and a completed PA15 forms. I would also a list of his known creditors. 

Write to his unsecured creditors informing them of his death and that you have renounced your executors powers and give them the details of the mortgage company who are likely to be taking on the administration of the estate.

Also contact the LA and inform them of his death and that you have renounced your powers and passed everything to the mortgage company.

Edit. Just remembered your husband had applied for bankruptcy before he died, how far has that proceeded? If an OR has been appointed you should probably contact them before you do any of the above. 

Arnold03

You are so kind, this has brought me peace. May I ask a couple of other questions @Keep_pedalling

🫶🏻when we both complete the pa15 form do we actually send that to HMCTS - 
🫶🏻do we send the mortgage company just a copy pa15 form or the original

after we register the death today, I think we will use the tell us once service - is this ok to do and will not be seen as intermeddling … and the same with informing his two bank accounts or his death.

Once we have done as you suggested - if any of the creditors come back to us to ask questions do we simply refer them back to mortgage lender? 

One more thought, the house key is currently with the estate that had been trying to sell the house, do I just advise the mortgage company of that … and we DO NOT collect it (sorry this intermeddling has scared me too) 

Keep pedelling… he didn’t submit the form, filled in online form, paid the fee, then DID NOT log back in and submit, so no bankruptcy in progress hence this situation 

silvercar

So sorry for your loss.

I am posting this in the hope that others more expert will comment. I don’t want to give a glimmer of hope where there might not be, but if this is something worth exploring then I hope the experts will confirm or reject.

We were in a house buying chain where one of the houses in the chain was being sold due to a sudden bereavement of the husband who solely owned the house and had attached business loans against the house. The widow, through a lot of legal effort, was able to claim that she was the part beneficial owner of the house, due to having been married to her husband and having run the home and/ or had some earnings. So even though the house was solely in his name, she was a part beneficial owner. His business debts could only come out of his share of the equity (value less mortgage) excluding the business loans secured on it. She dug her heels in and refused to sell until such a time as the business loan companies agreed that their loan repayment would be restricted to being from his equity share only, leaving her with a decent sum to restart her life going forward.

It took time, so long that the chain collapsed and we moved on, but we did see that it did sell eventually and heard on the grape vine that the business loan companies had accepted a reduced settlement in the end.