Deceased's debt liability

DaveF327

Hi all,

I've heard that nowadays a credit card debt is wiped upon the death of the cardholder and the executors can no longer be chased for the balance. Is that true?

And if he deceased had a recent bank loan and died only a few repayments in.. can the executor still be chased for the outstanding balance (it's a lot!) or can this be written off too?

The deceased didn't have a lot of money or assets. No house, just a car that will be reposessed by the finance company as there was outstanding finance on that too.

silvercar

It depends if the deceased had any other assets. If the estate has nothing left after funeral costs, then the debts die with the deceased. However, if there is money in the estate then the debts will need to be paid from the estate.

p00hsticks

DaveF327 said:

Hi all,

I've heard that nowadays a credit card debt is wiped upon the death of the cardholder and the executors can no longer be chased for the balance. Is that true?

And if he deceased had a recent bank loan and died only a few repayments in.. can the executor still be chased for the outstanding balance (it's a lot!) or can this be written off too?

The deceased didn't have a lot of money or assets. No house, just a car that will be reposessed by the finance company as there was outstanding finance on that too.

Debts, whether credit cards, bank loans or other debts, aren't automatically wiped out when someone dies. The first call on any money in the estate is to pay for the funeral. After that any money remaining should go to pay off any debts. If there isn't enough money to pay all the debts then the money needs to be divided pro-rata among the creditors. 

Keep_pedalling

Unsecured debt is only wiped out on death if the estate is insolvent and after funeral costs there is nothing left over. If after funeral costs there is still something left over but not enough to cover all debts then creditors are entitled to a portion of their money back on a pro rata basis.

In both cases you should not attempt to administer the estate, just write to the creditors informing them of the death (include a copy of the death cirtificate) and tell them that the estate is insolvent and that no one is administering it.

If the credit card debt is with the same bank as cash held in current / savings accounts then the bank is allowed to offset their money debt against the money in those accounts which would mean it is not available for funeral costs. 

user1977

DaveF327 said:

I've heard that nowadays a credit card debt is wiped upon the death of the cardholder 

It's nonsense, but where did you hear it?

WillowLeaf

DaveF327 said:

And if he deceased had a recent bank loan and died only a few repayments in.. can the executor still be chased for the outstanding balance (it's a lot!) or can this be written off too?

Don't forget it's not the executor that is personally liable to pay any debts, it's the estate. The executor might be chased as part of their role of administering the estate only.

YBR

DaveF327 said:

I've heard that nowadays a credit card debt is wiped upon the death of the cardholder and the executors can no longer be chased for the balance. Is that true?

The debt remains in the estate, it's not wiped out but neither is it transferred to family members or beneficiaries, it doesn't become the executer's debt personally. I think this is your worry?

Having said that some less reputable creditors may try to persuade you to pay.

As PP have said, you can (probably should) decline to administer the estate just write to creditors to say so. Otherwise use what assets you can to pay for the funeral and if anything is left use it pay creditors. There is a correct order of types of debt, I believe.

Skint_yet_Again

My dad passed away recently and he had a credit balance in an account and a credit card debt with the same bank. They automatically wiped the credit card debt despite there being enough money in the other account to pay it. Don’t know if this is the same for every customer or every bank but it was unexpected. The amount outstanding on the credit card was around £30. 

MyRealNameToo

DaveF327 said:

Hi all,

I've heard that nowadays a credit card debt is wiped upon the death of the cardholder and the executors can no longer be chased for the balance. Is that true?

And if he deceased had a recent bank loan and died only a few repayments in.. can the executor still be chased for the outstanding balance (it's a lot!) or can this be written off too?

The deceased didn't have a lot of money or assets. No house, just a car that will be reposessed by the finance company as there was outstanding finance on that too.

The estate is liable for the debt, it's not automatically wiped upon death. If the estate is insolvent then the remainder of the debt will be wiped once all the assets have been sold and paid to the creditors. 

Keep_pedalling

WillowLeaf said:

DaveF327 said:

And if he deceased had a recent bank loan and died only a few repayments in.. can the executor still be chased for the outstanding balance (it's a lot!) or can this be written off too?

Don't forget it's not the executor that is personally liable to pay any debts, it's the estate. The executor might be chased as part of their role of administering the estate only.

If an executor administers an insolvent estate and makes an error they can become responsible for estate debts. For example if they repay one debt at the expense of another (including one that they were not initially aware of). 

This is why you should never try to administer an insolvent estate. 

poseidon1

Keep_pedalling said:

WillowLeaf said:

DaveF327 said:

And if he deceased had a recent bank loan and died only a few repayments in.. can the executor still be chased for the outstanding balance (it's a lot!) or can this be written off too?

Don't forget it's not the executor that is personally liable to pay any debts, it's the estate. The executor might be chased as part of their role of administering the estate only.

If an executor administers an insolvent estate and makes an error they can become responsible for estate debts. For example if they repay one debt at the expense of another (including one that they were not initially aware of). 

This is why you should never try to administer an insolvent estate. 

Keep_pedalling is referring to concept of 'intermeddling' in the context of insolvent estates with consequences on the intermeddler as set out in the article below.

https://www.shma.co.uk/our-thoughts/estate-administration-and-intermeddling-executors/