joint loans when one person dies?

jackied_3

Hi Can anybody answer me a quick question please?

My father passed away recently and he had a joint loan with my mum for £17,000 with the bank.

We have informed the bank that my father passed away and they said they may right off the loan.

My mum had a visit from a lady from benefits to sort out her pension and has told her that this may not happen as the loan was in joint names. My mum doesnt have the actuall figure of what her new income will be now my fathers pensions have stopped or been reduced but paying off this loan is going to be very hard for her.

they didnt take out any insurance as their age meant it wasnt an option open to them so just wondering if anyone knows what is likely to happen so i can put her mind at rest. She has enough to worry about right now as it is. my mum was about 63 and dad was 73 when they took the loan out.

Thank you in advance for your help.

jonesMUFCforever

Sorry to hear of your bereavement.

Sorry to bring bad news but if there is no mechanism to repay a joint loan it falls on the survivour to continue paying.
Do you know why it was put in joint names and are sure there is no life police somewhere to cover this?

_Andy_

Hi Jackie

Sorry to hear about your dad...

If the loan was taken in joint names then each person is jointly liable for the entire amount. Therefore, unfortunately the debt is now the responsbility of your mother.

jackied_3

Thank you for your condolences.

There was a life insurance policy but they didnt take it till quite late and therefore it only paid out £3,900. this was used to pay for the funeral with a little left for mum to bank.

When the lady at the bank said it may be written off it showed on her screen as just in dad's name but the benefits worker rang the bank and they said it was in both. Mum never recieved any paperwork after she applied for the loan so we cant check back to see what name it was in.

the bank have said they will write to mum so ill wait for the letter but it seems, from what you say, she will have to manage to pay it back.

thanks for your help x

lea76

Sorry to hear about your dad.

Ask the bank for a copy of the signed credit agreement so you can see exactly who took out the loan, check who signed it, if your mums signature is not on it, i dont think she can be liable for the repayments.

Also has your mum received her widows pension its a weekly allowance of about £80 for a year and she should also get a £2000 lump sum. My dad died 2 years ago and that is what my mum got.

Hope that helps x

bandraoi

How much of the loan is left?

jackied_3

Hi

we were told my mum wouldnt qualify for the £2000 lump sum as she had a life insurance policy that would cover the funeral and they said the money would be to pay for the funeral.

As for the £80 widows pension, my mum gets two small private pensions, one hers and one my dads, my dads one will be about halved but mum will recieve the rest as a widows pension.

when mum comes over later i will ask her how much she gets and what from and ill post just in case we are missing something that she hasnt claimed.

The loan was taken out about 5 years ago, dont know exactly what is left on the payments but she pays about £270.00 a month.

thanks again

jonesMUFCforever

To be honest I would do what lea76 said - get a copy of the loan agreement.
I would be more inclined to listen to the bank lady than a benefits person - who under the Data protection Act would have no authority to ask for this information and the bank to give it. (Unless your mother had given written authority.)

If it turns out to be just in your late fathers name the debt falls onto his estate - if there is not enough money the bank has to write it off as it is unsecured.

When you have these details and if it is a sole loan then tell the bank to cancel the repayment standing order/ direct debit pronto.
Any payments made since date of death should also be refunded.

I hope it works out for your mother - it is unusual to have a joint personal loan unless the incomes of both parties were taken into account for repayment purposes.

Good luck.