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Original poster

What happens to personal debt after someone dies with no estate/assets

13 replies

GinBunny · 31/03/2015 23:25

My poor FIL is very ill at the moment and after hospitalisation this weekend has started to get his affairs in order. He has an insurance policy to pay for his funeral, and has given us instruction as to what songs and readings he wants as well as where he wants us to scatter his ashes. All very difficult to talk about.

As part of this discussion, he had told DH that he has at least one loan, a high interest loan that he is paying off the minimum each month. He has no estate or assets for the loan to come out from so what happens to it when he passes on? DH is worrying himself silly over it (I think it's easier for him to focus on this rather than his ill father tbh) as he thinks he will be personally liable to pay it off after FIL goes as is likely to be the executor of any will. He has 2 siblings, will the debt be reclaimed across them? Does it get written off?

I hope someone can help me reassure him. I've tried googling it but got conflicting results.

OP posts:

LaurieFairyCake · 31/03/2015 23:26

Not remotely liable for someone else's debt

He doesn't have to worry at all

catzpyjamas · 31/03/2015 23:33

Your DH will not be liable for his father's debts, only for ensuring that any creditors are notified.
From the Money Advice Service website:
If the value of the estate is not enough to pay off all the debts owed by the deceased, this is known as an ‘insolvent estate’. Where this is the case, the personal representative must payoff what debts they can in the following priority order.
1.Secured debts such as mortgage and secured personal loans.
2.Reasonable funeral costs and the costs of administering the estate.
3.Unsecured debts, such as credit cards, unsecured personal loans, gas, water and telephone bills, unpaid rent, Council Tax and other taxes, and repayment of overpaid benefits.
If there isn’t enough money to pay everyone, the personal representative should take advice from a probate specialist on which debts should take priority, and they should inform the creditors that the estate is insolvent.

Original poster

GinBunny · 31/03/2015 23:38

Thank you both, that's reassuring. But the personal representative must payoff what debts they can in the following priority order - does that mean from the estate or personally? I did see that but read it that they must pay it off personally. Is my interpretation wrong?

OP posts:

paddingtonbear1 · 31/03/2015 23:40

I read it as from the estate, not personally.

catzpyjamas · 31/03/2015 23:41

From the estate, definitely.

LaurieFairyCake · 31/03/2015 23:42

100% only from the estate

Unless he could signed the loan or anything like that

Original poster

GinBunny · 31/03/2015 23:47

Thank you so much for your replies, that's really helped. Tough times.

OP posts:

catzpyjamas · 31/03/2015 23:49

If you think about it, no one would EVER be an executor if they took on the deceased's debts personally. It's a hard enough task, especially when you have lost someone you love. Tell your DH to sort out what he can just now but more important to enjoy the time he has with his dad. for you both.

Original poster

GinBunny · 31/03/2015 23:59

Thank you Catz that is a very good point. And for your kind words.

OP posts:

fukkigucci · 01/04/2015 00:15

My mum had personal credit card debt when she passed away. Even though my dad is still alive, and they owned a house etc, all debt was written off.

Tanfastic · 01/04/2015 00:19

Same as previous poster, my dad had a few credit card debts in his name only. When he died, even though my mum was still alive and had a house the debts were written off (eventually). Not before some twatty debt collection agency got involved though.

Dowser · 06/04/2015 09:47

My cousin is in same boat. Husband had credit card debt which she has been told will get written off. I wondered though if anyone would try to come after her for the money.

I hope not.

EnlightenedOwl · 06/04/2015 09:54

My dad's personal loan was written off after he died (no assets to pay debt). Luckily I kept the letter from Barclays stating this
Because TWO years later I got a letter from a debt collection agency! Barclays had sold the debt!
I went nuclear both at Barclays and the agency pointing out if they were going to pursue the debt why did they not do this at the time and also why did they say it would be written off then sell the debt?
Anyway never heard a squeak since! Barclays said it was an "admin error" and the debt collection agency said they did not realise it was two years after the death when they bought the debt. Apparently what they do is buy these debts and then liaise with the Estate to see if any assets that can be used to meet the debt.
So don't worry about it this debt will not become yours but do hang onto any relevant paperwork on a "just in case" basis as apparently what happened to me has happened to others. But you will not have to pay a penny so don't worry.

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