Dads passed, debts far out weigh his estate worried about mums home, any help?

KD1 · 8 September 2011 at 10:30PM

My dad hired equipment on lease for his business in which he operated as a sold trader.

He passed away on the 14th june this year unexpectedly and had left an estate of around £1500.00.

He did have life insurance polices of which I had to apply for probate as mum and dad were not married to release the polices with the idea of paying his debts with the policy payout.

Unfortunately they both were tied to the mortgage on the home my mum and dad held as beneficial joint tenants and the debts I now cannot pay far out weigh the estate that my dad has left of £1500.

I have been informed anyone who my dad had a debt with could apply for an insolvency administration order and effectively change how my mums home is held to tenants in common and force a sale as the house now has a equity of £165,000.

The debt which I am currently dealing with is with Siemens.

* I am unsure and would appreciate any advice on how to best respond and handle a letter they have sent to me in response to a letter I sent previous, also any advice as to if they have to accept an offer if one is made which would be minimal based on my mums circumstances or would they push for an insolvency administration order to try and recover a full amount from the house if they wanted more than could be afforded a month?

I have typed a copy of the letter I am unsure on how to handle and best respond to and a copy on my previous letter incase this has any relevance I cannot see:

====================================

My letter to siemens :

Date 16 August 2011

Ref no. xxx-xxxx & Ref no. xxx-xxxx

Hi, I am writing to you in regards to my dads car diagnostics equipment which is here for you to collect.

I have been trying to get some advice on several forums on the current situation with yourselves as to why you want my dad to pay a remaining £5001.18.

I cannot believe that dying is not a good enough reason to break a contract and how we can be charged for time of use which he will not be-able to ful-fill now.

If the equipment was hired, and the company (Siemens) gets the equipment back, why does the contract not end at this point?

We have sent you a death certificate and you have been sending letters still addressed to my dad with money owed after he had passed away and we are trying to grieve, my mum is in a lot of distress as it is.

Does your company not have the slightest compassionate view on our circumstances?

How do you expect me to pay ? My dads funeral has taken the best part of his assets and I am in financial hardship in the state of JSA?

I await your response.

Siemens reply to my letter:

We write with reference the above leasing agreements and in follow up to your letters of 16th August and 23rd of August respectively.

In response to your queries relating to the equipment and any remaining balance this is standard procedure, as the agreement is effectively a loan. The contract is signed for a set period of time, the finance company then pays out the full amount for the equipment, its then paid back to the finance company by the hirer. As per your request please find attached copies of the leasing agreements and the terms and conditions attached to those agreements.

With regards to the equipment should the business no longer be trading and thus the equipment no longer required collection would be arranged.

Please provide contact details for the executor or the solicitor assisting in order for us to discuss the way forward.

=======================

Thanks kd1

fermi · 9 September 2011 at 8:26AM

How much equity is in their former joint home?

There is some info in this link as to how the Official Receiver would deal with property interests following an Insolvency Administration Order.

--> Deceased Insolvents

cappuchinokid · 9 September 2011 at 8:44AM

Hi KD, as no-one has replied yet I'll try to help as best I can but I'm not an expert.

Firstly - did your Dad leave a will? Would it be with a solicitor he has dealt with? It is best to check as the rules are different according to whether he left a will or not.

If you are sure he did not leave a will then the intestacy rules apply. Have you applied for Letters of Administration? This gives you the legal right to deal with his estate and apply for probate, this is done through the probate office and they can help you fill in the forms. If you have done this then I would suggest writing to Siemens telling them that you are dealing with the estate and that all further correspondence must be addressed to you and that all letters addressed to your Dad must cease. They are a big company, as will be the finance company and their letter looks as though they may try to be sympathetic. Do not make any offer to pay at this point as you will not know for sure how much money is left in the estate until you have made a full assessment of the assets and liabilities. For such a small amount I doubt they will apply for insolvency so please stop worrying about that.

If the house is joint tenants, then your Mum automatically gets the house, do you have proof in the copy entry on the Land Registry?

The life insurance seems to be the biggest asset - does this go automatically to the mortgage?

You are going to need some help with this so what you need to do is write down on a piece of paper all the assets, ignore personal effects, on one side and all the debts on the other.

Debts from the estate need to be paid in a certain order, and unsecured creditors are at the bottom of the pile, don't pay out any money from the estate yet. Funeral costs come first so it is ok to pay that if you have already done so, mark it as paid and who paid it.

If there are assets that have to be sold then you will need to make arrangements for this - otherwise put a reasonable value down, things are often worth a lot less than you think. Second hand a lot of things are worth very little so be realistic.

There is a lot of guidance here http://www.direct.gov.uk/en/Governmentcitizensandrights/Death/index.htm

Have you looked into whether you can claim any benefits for help with the funeral costs, etc?

I think your first port of call will have to be CAB, the probate office will often help as well, you may need a solicitor depending on how complicated things are but it sounds as though you should be able to deal with this yourself.

So just send a holding letter to Siemens as they ought to know it can take six months or more to sort out probate and tell them you are in the process of dealing with the estate and see what comes back. They may even write the debt off, you never know.

Do not pay out any money from your own or your Mum's funds, neither of you are liable for your Dad's debts as his estate is a separate legal entity, and if there is no money left then the debts have to be written off.

KD1 · 9 September 2011 at 11:19AM

Hi Thanks for your reply(s), I am the administrator. Have included most information you ask in my first post, thanks for taking the time to write back to me, very much appreciated. Thanks kd1

cappuchinokid · 9 September 2011 at 11:39AM

I would suggest a short letter to Siemens along these lines:

Thank you for your letter of xxx date.

I can confirm that the business is no longer trading and that your equipment is ready to collect at xxxx address.

I have Letters of Administration to deal with my late father's estate and I enclose xxxx as proof.

I am in the process of collating information on all assets and liabilities of the estate in order to apply for probate, this is likely to take some time. Please address all further correspondence in this matter to myself and confirm that you will cease sending correspondence addressed to my late father forthwith. I would further request that you do not contact me other than in writing and would be grateful if you would confirm this.

Yours

Do not make any offer to pay, in fact don't offer to discuss money at all and if they want to then just repeat the sentence that it will take some time to collate the assets and liabilities. Put the ball back in their court - and post back when they have replied. If they do collect the equipment make sure you get a receipt as proof.

What did the information they sent you actually say about the leasing contract?

So the life insurance payout went directly to the mortgage company? Did it pay off the mortgage completely?

KD1 · 9 September 2011 at 2:28PM

I have been made aware creditors can apply for a solvency admin order to courts if the debts far out weigh the estate, which in our case it does.

They would do this to change the previous title of the home they owned from beneficial joint tenants to tenants in common so they can pull money from the home.

This clause were introduced in 2001 apparently to allow them to do this. I want to avoid this like the plague so thought it would be best to make a repayment offer affordable to mum ?

The life policies tied to mortgage left an outstanding balance of £18,000 left on mortgage.

The information sent to me in terms & conditions about the lease to sum it up without writing the endless clauses were:

You have no rights to cancel the Agreement under the Consumers Credit Act 1974, the Timeshare Act 1992, or the financial Services (Distance Marketing) Regulations 2004.

If an offer were to be made it would have to be minimal but do they have to accept an offer if one is made in proportion to what is affordable by my mum? To avoid them trying to force a sale of her home.

Thanks for your reply's kd1

cappuchinokid · 9 September 2011 at 3:45PM

You can't make offers or pay anything yet. You are not yet in this position, remember that as Dad was self employed there may be a tax liability still and HMRC comes above unsecured creditors in the pecking order. You need to sort out EVERYTHING as regards assets and debts before paying anything over. The company knows this and will have to wait. When you do pay money over it has to be in the right order to the creditors.

The letter from Siemens just asked for who to contact. Tell them and take it from there. Legally the estate owes the money but there may not be anything left.

I think you are going to need face to face advice and please stop worrying about what may happen, I think whoever told you about forcing something has got you into a panic. The liability may seem huge to you but really it isn't, especially not to a large company. The part you have quoted is because this is a business lease, which doesn't have the same sort of protection as non-business leases and legally the house (and mortgage) now belongs to your Mum.

Solicitors will give a free half hour consultation and it sounds as though you are out of your depth with all this. Even if they did try to force this then it would mean going to court and Judges can be very sensible about this sort of thing.

Gather everything together and see a solicitor, ask if the contract is 'frustrated'. If your Dad had not passed away he would still have his income to pay this and it would be a non issue. If his business had continued after death then this would still be a business expense - but to the business, and as he was a sole trader there is no more business.

I would be surprised if they tried to go after the house. Send the letter and see what they say.

Your Mum is not liable to pay this and shouldn't be, neither are you as the assets and debts belong to the estate and you only inherit if there is anything left over after the estate has been wound up. It doesn't matter if your Mum can afford this or not - she is not liable.

poppasmurf_bewdley · 9 September 2011 at 5:17PM

You need to do three things quickly:

See a solicitor
See a solicitor
and
See a solicitor

NeverAgain_2 · 9 September 2011 at 5:26PM

poppasmurf_bewdley wrote: »

You need to do three things quickly:

See a solicitor
See a solicitor
and
See a solicitor

If you take the advice above, you first need to find a solicitor who specialises in this area.

No easy task, but having a root around the Law Society website would be a start.

http://www.lawsociety.org.uk/choosingandusing/findasolicitor.law

theoretica · 9 September 2011 at 9:37PM

Is this £5000 the bulk of the debt? It seems to be the one you are worried about.

In order to force a sale of your mother's house they would need to get a court order and no sane judge is going to boot your mother out of her home over £5k. However, in order to get the company off your backs there is probably a form of words you need to send and they will almost certainly want some form of proof that there is no money or formal accounts, not just you saying there is no money. At present they have no way of knowing that you are honest and not just trying to get away with it.

Dads passed, debts far out weigh his estate worried about mums home, any help?

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