Sole Trader question

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Nicolaroyle
Nicolaroyle Posts: 3 Newbie
in Small biz MoneySaving
Hi, sadly my father in law has been suffering with a terminal illness. He has a couple of months at the most. I am desperately trying to help my mum in law prepare as much as possible. My father in law was a sole trader he closed his business officially last October. The only thing that remains is a business bank account overdraft. As he was a sole trader would my mum in law be responsible for settling the remaining debt or would it be written off. They have no savings only the house they both own.
The BBA was with NatWest I’m unable to find any thing relating to this in the Ts&Cs online. I’d just like to know where we stand so we can prepare. Any advise much appreciated.

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  • [Deleted User]
    [Deleted User] Posts: 0 Newbie
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    Would depend on if he put up any security.
    Also is he claiming PIP under special rules?(if under 65 or AA if over?)
  • Nicolaroyle
    Nicolaroyle Posts: 3 Newbie
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    Hi, thanks for your response. He is too old to claim PIP, he is on pension credit and some kind of benefit for terminal illness through pension credit. It’s a business bank overdraft. My mum in law said it wasn’t secured on the house as it was very important to him that it was all in his name only.
  • evenasus
    evenasus Posts: 11,861 Forumite
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    edited 16 October 2019 at 8:33AM
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    This is just a general discussion forum. You might receive more help from this one. Moneysavingexpert Small Biz & Charities' MoneySaving https://forums.moneysavingexpert.com/forumdisplay.php?f=27
  • Cornucopia
    Cornucopia Posts: 16,157 Forumite
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    Thread moved.
  • Pennywise
    Pennywise Posts: 13,468 Forumite
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    edited 16 October 2019 at 9:02AM
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    Was the house owned as joint tenants or tenants in common?

    The overdraft will be payable out of his estate. So whether it will need to be repaid depends on what his estate amounts to, hence my question above. The answer will determine whether his half of the house is part of his estate or whether it passes automatically to his wife and therefore doesn't form part of his estate.

    His estate will be his half of any joint bank accounts or savings/investments, any life insurance, any other assets held in his name etc.

    If he has no estate, no assets, etc., then no, his wife won't be liable to repay his debts and they will have to be written off unless she signed any kind of guarantee or indemnity to the bank.
  • Nicolaroyle
    Nicolaroyle Posts: 3 Newbie
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    They own their home outright in a joint tenancy. As far as I am aware the house is all they have. Thank you for your advice.
  • 00ec25
    00ec25 Posts: 9,123 Forumite
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    Nicolaroyle wrote: »
    They own their home outright in a joint tenancy. As far as I am aware the house is all they have. Thank you for your advice.
    the sole trader did not "close", since there is no such thing as his business, there is only "him". The business has simply stopped bringing in income, everything else carries on, including the debt

    the overdrawn bank account remains in his name and is his responsibility to clear, even after his death. So, as you say it is a joint tenancy, not a tenancy in common, he will die with nothing in his name that can be used to pay off his debts and so that will be the end of them
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