If your parents have debts and they die what happens?

[Xena]

If they have no life assurance?

Think the executors are expected to settle them out of the estate by selling assets.

this may help .

soory missed end off sentence "... selling assets if needs be"

The debts have to be settled out of the estate. Then whatever is left over is shared out to will beneficiaries (if there is a will and if there is any left over).

If the assets aren't enough to cover the debt, tough shit, the debtor gets left out of pocket. No one "inherits" the debt, the estate of the dead person is solely responsible.

Thanks guys. My Sister is worried as her pil have debts bigger than they estate (as they have a council house) and her and her DH were worried that they would inherit the debt as they are the only ones in the family who have positive equity

Also if it's credit cards etc check if they had payment protection on their sgreement if they have this will pay it off. When my mum died she had only just started paying off a 3 piece leather suite that she got on interest free credit for a year luckily for me she had payment protection so the suite effectively only cost us the £120 she'd paid off until that point.

Just checked with DH, who is a solicitor specialising in this area of law. Took him a while to get back, LOL!

The estate is insolvent
Your sister and BIL can just walk away and are not liable
Liability passes to the next of kin only

UNLESS your sister and BIL hold themselves out to being responsible

I think BIL would say he was his fathers next of kin this is his mothers 2nd marriage and he is the eldest they are thinking atm that His parents will split up. They have in excess of 40k debt and no property or savings

they have taken a debt consolidation loan that they only pay 200pcm and are 57 and 60yrs old

but how was the loan secured if not on their house? Surely, with interest that would take about 20 years to pay off...is a lender going to be that daft?

"Assets" can include all sorts too, if not house, think car, furniture etc and then there may be long term, perhaps forgotten, savings or pension schemes outstanding (which may have a Death in Service pay out for the remaining partner or lump sum on retirement).

BIL father is due a lump of 10K on his retirement if he works till he is 65 although for some reason bil mum is trying to convince him to retire at 60 (she is the older one so that has something to do with it)
Tissy that is why my sister is worried as it will never be paid off by the time they die. they don't own a car and can't imagine there 'stuff' would cover 10K let alone 40. They saw papers whilst looking through suitcases of photos?? that showed 2 debt cosolidation loans one with a repayment of 70 pcm and the other 120 pcm one in his fathers name and one in his mums

all they worried is that somehow they will inherit the debt I will tell them not to be named as nokin on anything

all they are worried about is

If the estate is insolvent, then the debt dies. Your BIL being named as next of kin will not alter this. If there is nothing in the estate, your BIL will receive nothing - and he will not inherit any outstanding debt as long as he did not sign anything to indicate that he accepted responsibility for any debts, such as standing as guarantor.

is it possible that along with the consolidation loans there are life insurance policies to cover the debt? I still don't think that any lender would be so daft as to allow loans of that amount of money without some kind of surety.