Debts and The Deceased....

[cpjitservices]

A bit morbid I know but I need some advice,

 

some members (inlaws) of my family who are now in there 60's have been getting loan after loan after loan, shoppaccheck, banks, private loans etc etc.

 

Im wondering where I'd stand that if the croaked and left all this debt behind (well over 5 grand) would I be the one liable to pay it all back ?

 

 

TIA.

[featured_spectre]

It used to be the debt died with the person, however legislation changed (watched this on a channel 4 investigation program). It now gets recovered from the deceased persons estate and belongings, and then onto next of kin up to £100'000. Anything beyond is written off.

[cpjitservices]

right, Well they have no estate, they dont even own the car that they have (mobility) and there belongings are not worth alot.

 

So does this mean that it'd probs get passed to me ?

[featured_spectre]

More than likely unless you emancipate yourself from them...

 

*edit*

 

Just saw it is your in laws, it would pass to their children, not you. If it is just your wife, she can apply for emancipation and then the debt passes on to the spouse, and upon the spouses death, the debt is written off.

Edited April 8, 2013 by featured_spectre

[jinnantonnixx]

It used to be the debt died with the person, however legislation changed (watched this on a channel 4 investigation program). It now gets recovered from the deceased persons estate and belongings, and then onto next of kin up to £100'000. Anything beyond is written off.

 

Is this true? That's outrageous! How can a debt be transferred to a completely separate individual?

[featured_spectre]

Blame the finance sector for this. It prevents people running up ludicrous debts and then the finance companies being out of pocket.

 

It was passed silently with no objections because not many knew it was happening.

[cpjitservices]

Wonderful... looks like its down to me then...

[tmcd35]

When my Dad died last year his, and his estate couldn't cover the debts, they were written off. I was told at the time that the debt's couldn't be passed on as only his signature was on the credit agreement. I'm sure each credit provider will take a different view, but they all have funds to write off debt like this. First port of call is always to contact the credit provide directly and send them a death certificate. Then wait and see.

[sparkeh]

It used to be the debt died with the person, however legislation changed (watched this on a channel 4 investigation program). It now gets recovered from the deceased persons estate and belongings, and then onto next of kin up to £100'000. Anything beyond is written off.

Do you have a link to any official info on this?

All I can find is lots of info on how only signatories to debts are liable, if there are none then its paid from the estate, if there is not enough money then normal insolvency rules are followed. Debts cannot be passed onto to non-signatories.

[featured_spectre]

Will see if I can find it. It was on dispatches (I remembered the program) around January time.

[fiza]

I dont think thats right -

This is from CAB website ;

Citizens Advice - Dealing with the financial affairs of someone who has died

 

"Debts

The person who has died may have left debts, for example, an overdraft on their account or a credit agreement that has not been paid off. When someone dies you should always try to tell all their creditors.

 

In general, if there is not enough money in the estate of the person who has died to pay their debts their creditors cannot recover the amount still owed from anyone else, including that person's surviving relatives. You should check whether that person had any kind of insurance policy that would pay off any of their debts on their death, for example, a payment protection insurance policy taken out at the same time as a loan.

 

In some cases the debt may have been a joint one, for example, an overdraft on a joint account or an amount owed on a credit agreement taken out in joint names. If this is the case, the debt can still be recovered from the surviving person. In addition, if you lived with someone who has died you may still be liable for debts that relate to the property, such as council tax or water bills."

[m25man]

@fiza is spot on with the link.

It only gets confusing as next of kin you will most likely become responsible to obtain probate or administer the estate of those that have run up the debts.

 

This is where ill advised or unprepared you could easily fall unwittingly the victim of a persistent debt collection agency.

Don't come up for it.

 

Tell all creditors that they will have to wait for probate and they will get what ever there is left when finalised.

 

If you know these (in-Laws) have run up debts they cannot afford to repay and the interest/repayments are likely to get out of hand they need to seek advice now not wait to die and pass the responsibility of dealing with it to somebody else.

Just hope they haven't fraudulently made your wife a guarantor or joint name on the agreement. Wouldn't be the first time...

[cpjitservices]

I don't think they'd dare lol, Thanks for the advice everyone!

 

@fiza is spot on with the link.

It only gets confusing as next of kin you will most likely become responsible to obtain probate or administer the estate of those that have run up the debts.

 

This is where ill advised or unprepared you could easily fall unwittingly the victim of a persistent debt collection agency.

Don't come up for it.

 

Tell all creditors that they will have to wait for probate and they will get what ever there is left when finalised.

 

If you know these (in-Laws) have run up debts they cannot afford to repay and the interest/repayments are likely to get out of hand they need to seek advice now not wait to die and pass the responsibility of dealing with it to somebody else.

Just hope they haven't fraudulently made your wife a guarantor or joint name on the agreement. Wouldn't be the first time...

[witch]

I too can find nothing other than the fact that debts will come out of any estate before anyone inherits anything.

 

I am sure that they cannot recover debt from anyone who was not involved in the debt in any way - every website I have looked at says this

[featured_spectre]

I too am unable to find the info, will have to see if I can find it on dispatches website.

[synaesthesia]

They absolutely can not recover debt from another individual unless it was also in their name (i.e. joint accounts). Some debt collectors will try it, but you can easily tell them to go hang.

 

(source: experience with this and with debt collections agencies)

[localzuk]

Indeed, debt is individual, no-one can claim you have to pay for something unless you were a signatory to the original contract. Being related to someone does not magically make you a signatory to anything.

 

The only 2 aspects of debt on someone's death are that a) it doesn't 'die with them' - it is taken from their estate in order of secured debt, non-secured debt, and then finally any left over goes to beneficiaries and b) next of kin is not responsible for it, unless they are joint signatories on the debt.

[synaesthesia]

Oh, and in the case of some types of loans that also includes guarantors.

[localzuk]

Oh, and in the case of some types of loans that also includes guarantors.

 

Indeed, but a guarantor is basically a 'backup signatory' to a contract, so are effectively party to the debt anyway.

[synaesthesia]

Indeed. Making sure all the bases are covered as different providers/sharks will use different terms, sometimes to catch people out.