Debts after death

[TheSnootiestFox]

Hi, just after some help please! Long story short - my mum died recently leaving under £3k in her accounts but a very neglected house worth £145k. She also left debts of around £8k for unpaid credit card bills, care bills, water and telephone etc. Her cremation will be paid for out of the £3k leaving me £1000, and I need to pay the contractors that I instructed before she died and who have completed work on the house as i wasnt expecting her to pass away quite so quickly. There will be about £100 left. I have no intention of selling the house as I rent currently and intend to live there with my children. Credit rating shot due to previous mortgage going into arrears when ex h walked out so I can't remortage. My question is, can I be forced to sell up and pay the debts?

sorry for your loss the house forms part of your mothers estate, and is an asset, so will need to be sold to settle all the debts of her estate.

The only way you can keep the house is to pay off the estate debts yourself.

I’m sorry for your loss. Do you know if there was a will? I think that you will need to seek legal advice as the house is part of her estate and I believe that it may be sold to pay her debts.

Sorry for your loss OP, did your mum leave a will?,
Unfortunately it might form part of her estate, in which case it will need to be sold and then used to pay off her debts

Unless you can find 8k then your probably going to have to sell the house.

We had this situation with my Mum in 2019 and we had the option to either settle the debts ourselves or sell the house and pay it from that. We chose to sell the house in the end.

Your Mum's house is part of her estate. Her estate if there is enough must pay off her debts before anything can be inherited. If you inherit the house could you get a small mortgage to pay off your Mum's credit card debts? Otherwise the house will have to be sold to repay her debts then you will get remaining amount.

The house is part of the estate. The estate pays the debts. Then you inherit what’s left. I was told by my probate solicitor that maintenance costs could not be put down as expenses (ie, the money you have paid contractors) once the person had died because the estate should have been frozen at the time of death. (If you’d booked the work prior to the death and can prove that building materials were already purchased by the contractors prior to the death you might have a case). My solicitor said I might be able to claim maintenance costs back from the estate after probate, but as I was the sole beneficiary there was no point as I would be paying it myself.

Edited to add - you might get a mortgage even without your credit rating because you will have so much equity in the house - you’ll only be borrowing a small percentage of the house’s value.

Are you the executor of the will?
is there a will?
will you be doing probate?

Yes, you can is the short answer. You can't move into her mortgage free house when she owes people £8,000 and simply claim to have no money and refuse to pay her debts. You are entitled to whatever is left after her debts are paid - and if there is no actual cash then the house will need to be either sold or re-mortgaged to pay them.

You then get what is left.

OK all, thanks. Looks like I'm selling up then 😔. And @Hatty65 , I'm not refusing to pay anything, I just didn't know how the land would lay when they weren't my debts. No need to be so snotty!

@MikeRafone, yes to probate, no will, and I'm an only child.

If you'd inherit the house, and you want to live in it, I'd try and borrow to pay the debts. I'd also write to the credit cards and tell them she has died and see if they cancel debts.

Even with a terrible credit rating, you ought to be able to get a secured loan or mortgage, although it might be at a higher rate of interest than normal, because of the equity in the house. Also your outgoings will be less because you won’t have to pay rent. That will make it easier to borrow money. I would get advice from a specialist broker before you decide to sell up.

Thank you @ZoeyBartlett but there's no way I could borrow anything. I'll see if there's another way round it as there is no way am I selling that house!

How much does the estate owe in total? Could you get a loan for that amount to keep the house?

@TheSnootiestFox

it would seem such a shame if you cannot raise the 8k somehow or other to secure your mothers house for your own future security. If you currently rent surely some kind of loan that matches your monthly rent would resolve things.

I would suggest you go see a financial advisor about this.

Thank you @TousBous, I'm given myself a shake and I'm not selling up for 8k! That's good advice, I'll see if I can find myself a mortgage broker.....

Thanks @Karensalright, I'll see who I can find locally.

You need an £8,000 mortgage even with a ruined credit rating that's likely less than what you pay in a year on rent. I would also look at bank loans and not just mortgages. Whilst you may get an extremely high interest rate if you can diligently pay off you'd be settled withing 2 years easily.

Contact the creditors some companies cancel debts if not too much, worth a try at least! Agree dint sell try and raise some money and live it the house. Good luck!

Her bank account will be frozen now and the executor will need to take over the debts but they can also apply to the bank to pay for the funeral. Where is the £1k you're left with coming from, you won't be able to use any of the money in her account. is there an Executor or solicitor dealing with probate. Sorry you lost your mum,

Talk to the creditors about a payment schedule?

My DM left debts of 8K. She died 2 years ago. The house is about to be sold and the debt collection agency has been more than happy to wait for this to happen.
OP, I would be extremely surprised if you could not get a mortgage for, say 10K, to help pay these debts. I’m pretty certain you’d get a bank loan for that amount considering you’ll own the house outright. Find yourself a mortgage advisor, and speak to your bank.

Hope it works out, OP. It shouldn’t be too difficult as although lenders might consider you to be high risk because of your credit rating, lending £8k against a property worth £145k is as about as low risk as you can get. The bank would easily be able to recoup the debt and their costs if you defaulted on the £8k and they had to repossess the house and force a sale so there is no real risk to them in lending to someone with poor credit for such a small amount. A specialist broker should be able to find you a lender.

The building society has given me a form that I got signed by a solicitor, returned to them and then the money will be transferred to my account in a few days. I am paying for her cremation from that. She had literally pounds in her current bank account and the bank moved it to my bank account within 24 hours. Nothing was frozen anywhere. I am also her executor.