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Brother died intestate; massive debts; need advice

(37 Posts)
Jux Thu 08-Jul-10 16:20:38

My brother died suddenly last year. He owned a ground floor, one bed flat, 2 minutes' walk from Clapham Junction station. It is in a dreadful state, needs doing up badly, new bathroom suite, deep cleaning everywhere, etc.

He also had massive debts.

The solicitors who are dealing with it say they are near completing and will have the letters of Administration soon. However, in order to pay off the debts we need to find 175K. Obviously, the flat could be sold for more than this, even in its current state. DH, however, is insisting that we get in there, sort it out for about 15K and reap up to another 50K when we sell it.

I have no idea if we're even allowed to do this. ATM the flat doesn't belong to us, it belongs to my bro's estate. The solicitors have very kindly given me permission to stay overnight in there when I come down from Devon to see to things.

The other thing is I don't want to sell it at all (it is making me cry to think about it, I know I have to get over this though). DH has a friend who has had to wind up the estates of 3 of his elderly relatives, and who has told dh that credit card debts die with you - you don't have to pay them back. Much of my bro's debt is to credit cards. Do we have to pay them back? This would reduce the amount owed by a certain amount.

Neither my elder bro nor I can get a mortgage for 175K. Elder bro has investigated and says a: it's over 3 times his salary (fair enough, I wouldn't want to borrow more than that), b: he is over 50 and therefore mortgage companies want 40% deposit.

There's no way a mortgage co. would be nicer to me - disabled, non-working, over 50, don't make me laugh!

Any ideas of what we can do?

Sorry this is a bit tangled; I am upset.

belledechocolatefluffybunny Thu 08-Jul-10 16:27:24

Hi Jux.
I'm so sorry that you are going through all this. I'll help as much as I can but it's been a few years since I've needed any wills and probate.

There's a list of priority debts, the tax man (surprise surprise) comes first. Credit cards and other debts do not die with a loved one. They are in the list of debtors. Companies like doorstep lenders have their own insurance though, these debts are cancelled upon reciept of a certificate. Was there any payment protection/insurance for any of the credit cards?

belledechocolatefluffybunny Thu 08-Jul-10 16:29:20

www.direct.gov.uk/en/MoneyTaxAndBenefits/ManagingDebt/DebtsAndArrears/DG_10013093 this is useful

IngridFletcher Thu 08-Jul-10 16:40:07

I am no expert but I really think you are going to have to sell the flat to pay the debts. Credit cards debts only die with you if you have no assets.

You could do as your DH suggests and do the flat up and you have to be sure that it will belong to you. Did he have a will? If not the solicitor is obliged to put notices of the death in a local paper and a london one that I can't recall to see if anyone else has a claim on the estate i.e a wife or a child you did not know about.

If you have a brother he would have to agree to any work done on the flat etc.

Went through this with my Dad (but no debts thank God) and it was hideous and stressful so you have my sympathy.

Jux Thu 08-Jul-10 16:49:04

Thanks for the link fluffy (How are you btw?).

Some of the credit cards had insurance and have been covered, but he was a twit about money, just bought stuff, like a kid in a sweet shop - and always good quality, so expensive. I was fairly shocked, as he was such a sensible chap!

Amazing what you learn about your loved ones when they die. He bought a harmonica for 45 quid, fgs! Gold bloody plated.grin Idiot.

belledechocolatefluffybunny Thu 08-Jul-10 16:56:10

I'm good thanks. I managed to get some medication to wake me up and it works like a dream!

The credit cards with insurance just need a copy of the death certificate sending off with a letter (keep copies).

Anything in the property is classed as chattels and isn't classed as his estate IIRC, his estate includes stocks and shares/savings/jewellery/art and the flat. Did your brother leave a will?

Jux Thu 08-Jul-10 17:14:38

No will. We have solicitors. There is complete agreement between my Big Bro and I; we are not going to have problems over this in that regard. We get on so well, and we are also dealing with the aftermath of mum's death.

Little Bro's solicitors can't actually tie up the estate/letters of admin, until we've got probate on mum, as LB is also a beneficiary of hers' (as are BB and I). It won't go anywhere near covering LB's debts though. It's possible that if we pool our share then BB and I might be able to get the 40% deposit together for a mortgage, but there's no way we're going to get a mortgage normally so it's pointless thinking about it. Except that I just don't want to sell it.

We will have enough to do up the flat, though. LB's current mortgage is for, I think, 133K, so the rest is other debt - taxes, cards etc.

I wonder if we get together enough to pay the mortgage arrears, do the flat up, persuade current mortgage co to just transfer it to us, persuade other debtors to wait, rent out the flat and pay them off bit by bit out of the rent? Pipedream?

HecateQueenOfWitches Thu 08-Jul-10 17:19:20

when you die, your relatives aren't responsible for your debt, are they? I always thought that what you left (if anything) was used to pay debts. If there was anything left, then it would go to whoever you put in your will, or relatives if you made no will.

You're not responsible for relatives debts are you? - I'm thinking now about my parents, who are up to their ears in debt! No WAY I'll pay that off!

I really hope I'm misunderstanding this thread! <quivers>

Jux Thu 08-Jul-10 17:20:23

I want Modafinil (?). They gave me pregabalin, but it hasn't woken me up, though it has lessened the pain when I'm awake. I really really want Modafinil. I want to be bright and breezy like I used to be. Do you mind telling me what you've got? You can CAT me if you want to keep it off board.

How's your lovely tea-making boy? My delightful non-tea-making dd is not making tea, stressed from waiting for SATS results, even though she knows they're pointless, and is moaning because no one wants to go swimming with her. She has turned down my suggestion of helping me re-pot stuff in the garden; really, how exciting does she want her life to be?!!!

said Thu 08-Jul-10 17:22:03

Sorry you're going through this. Why don't you want to sell the flat? Is it "just" for sentimental reasons?

Jux Thu 08-Jul-10 17:24:44

Hecate, I don't think debts get inherited any more. All it would mean is that, like us, you would have to sell the family home or whatever in order to pay off the debts. If it doesn't cover them then I think the debtors just get disappointed.

I simply want to find a way to hang on to my little brother's flat and pay off the debts without selling the main asset! I think I want to have my cake and eat it too.

I may contact the wider family and suggest we all pool our resources so that we have a Family Flat in central London... Heaven knows how we'd work that one out.

belledechocolatefluffybunny Thu 08-Jul-10 17:26:06

They are responsible hectate, your next of kin has to sort them out. The debts are repayed out of the estate, if there's no estate then the next of kin has to write to each creditor saying that there's no money in the estate and they are unable to pay the debts. Then they are normally wipped. This can only happen if there is nothing in the estate.

You can but try Jux. I may be possible to get a mortgage, you could try a buy to let mortgage rather then a 25 year one which may help. Is there a mortgage advice place where you live?

belledechocolatefluffybunny Thu 08-Jul-10 17:27:13

I'll start a drug thread Jux

That's right, Hecate -- but your estate is liable for the debt. So as Jux says the simplest option is just to sell the flat as it is and pay off the debts out of the proceeds. Then Jux and her elder brother would split what (if anything) was left over between them. If the value of the estate didn't cover the amounts of the debts then the creditors would have to be paid off in the order mentioned by belle above but the debts left over at the end would just die; Jux and her elder brother wouldn't be responsible for paying them.

The complications in this case come in because (a) if they are going to sell the flat, Jux and her elder brother would like to invest some money in it first and (b) Jux doesn't really want to sell it at all.

I have been told once that in Greece your debts are inherited by your next of kin if your estate isn't enough to cover them, but I have no idea whether that's true.

HecateQueenOfWitches Thu 08-Jul-10 17:33:07

Ah, s'okay. I was clearly being thick blush I thought I was reading that the debts themselves must be cleared by the next of kin if the estate didn't have enough to cover it.

belledechocolatefluffybunny Thu 08-Jul-10 17:36:44

here you go Jux

It's alright Hectate, it's a minefield. I think they just make it confusing so the lawyers get paid more to sort it out.

Jux Thu 08-Jul-10 19:17:53

Thank you fluffy.

Said, it's not just sentimental reasons. It's a fantastic flat (once it's sorted it will be anyway). It's in a fantastic location (well, not Mayfair, or Soho - my particular favourite. My elder bro is renting atm, and commutes to Clapham Jct and then out again so it would cut his journey time down dramatically, a flat in central London could be rented out if we don't use it and would more than pay for itself which would help us enormously as our income is very very low.

Oh I don't know why I want to keep it. It just looks completely bonkers to sell it.

Babieseverywhere Thu 08-Jul-10 19:44:14

What about posting for advice on www.moneysavingexpert.com they have some really helpful people on there. Worth a quick post.

Jux Thu 08-Jul-10 19:52:46

Good idea, babies, thanks.

BeenBeta Thu 08-Jul-10 19:55:54

Jux - just checking. Have your solicitors explained to you that you are not liable in any way for these debts?

If your brother's debts exceed the value of his assets there is not enough to pay the debts so the creditors get paid in order of priority - end of.

For goodness sake do not in an way agree to pay of your brother's debts. Its just a grotty flat - as you have described it.

You are getting emotionally connected to this and that is dangerous. It is worth what it is that is the end of it. You should not be doing anything.

If you want to help your elder brother then by all means give him some of your money but dont tie this millstone to yourself in the current economic environment.

Is your older brother willing to buy the flat at market price or pay off all the debts? If not the flat just has to be sold.

Jux Thu 08-Jul-10 20:54:16

He'd be willing to buy the flat at 175K to ensure all debts are paid off - that's the figure the solicitors have given us.

I do understand that I'm not liable for LB's debts, but I can't remember whether the solicitors told me that or not. I was in shock when I saw them. 2 days after LB died, 6 wks after mum died. I really can't remember anything much.

That's one reason why I'm asking here. DH is insisting that we can't be forced to sell the flat, but I can't see how it's ours to make a decision on yet. It won't be ours until the estate is sorted, and it can't be sorted until the debts have been paid, iyswim.

belledechocolatefluffybunny Thu 08-Jul-10 21:16:31

The flat (but not the furniture) is his estate. The estate is used to pay off his debts. There's a hierarchy of who gets paid, the credit cards are in the list but in the middle. The family, I'm sorry to say, is at the bottom. Once everyone else has been paid the family recieve what's left. If there's nothing left by the time the credit cards are to be paid then the next of kin write to them and tell them there's not enough left in the estate to pay them and the next of kin are unable to pay them (it's a formality).
The credit cards/loans should have frozen any interest on the accounts at 0% until the estate is sorted out.
Is the 175k any mortgage arrears or just credit cards/loans? this seems a rediculously high amount, I would question whether or not these lenders were wreckless in their decisions to lend him all of this money (there may be some help for you here).

bluecardi Thu 08-Jul-10 21:21:31

the debts have to be paid from the estate. If there's cash then this is used otherwise anything like property, shares, valuable belongings are sold.

You don't pay the debt from your own pocket.

If there's nothing left after debts paid then those in line to have benefited will get nothing.

belledechocolatefluffybunny Thu 08-Jul-10 21:26:10

There may be ways around your problem. I did read somewhere (a reputable web site) that loans/credit cards taken out before 2007 are often unenforcable as loan agreements are normally shreaded after a certain amount of time. I would write to the CC companies and ask them for a copy of the contract and a breakdown of costs (so you can sort out the estate wink)
Each lender also has to make sure that any lendee is able to manage any lending and not to overextend themselves, 175k is alot of money so it may be worth looking into your brothers income and expenditure to ensure that these CC follow the guidelines and the consumer credit act.

Jux Fri 09-Jul-10 00:44:07

That's a good idea fluffy. I'll get all the papers out - I have copies of some, the sols have the originals.

I'll have a chat with the sol when she gets back from holiday next week and ask if she's done that.

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