MIL loan balance after death

[Furryful]

Hi,

MIL passed 4 weeks ago. It wasnt expected and we’re all reeling.

she hasn’t left an estate as the house she shared with FIL has passed to him under the rule of survivorship. They owned the house as joint tenants so it doesn’t form part of her estate. SIL is a solicitor and gas helped us understand all of this.

MIL had a 5k balance outstanding on a personal loan at the point of her death. The bank have been quite aggressive in their approach with FIL. FIL has given dh permission to speak to the bank on his behalf.

The bank have said that they could apply for an insolvency administration order to reclaim the debt. This would effectively force FIL to sell the house. This seems heavy handed for a 5k debt

SIL thinks that it’s unlikely that they would pursue that route as it wouldn’t be financially profitable for them after costs etc.

Does anyone else have experience of this?

I think you should post this on Legal rather than Financial Matters.
Is this in Scotland? Rules are different, I think.

In the UK if the debt was unsecured then it forms part of the estate (which may not have very much in it if it didn't include the house). But I'm not sure what happens if the estate is insolvent. Did she have any other assets. they would be in the estate - bank accounts, car, jewelry etc. And who paid for the funeral, that is also a debt of the estate.

If the debt was secured on the house, then it still forms part of the estate, but the bank may be able to foreclose on the house as their security. But it's an extremely aggressive tactic for such a small sum.

Thank you. We’re in the UK. There are other assets. I’d understand if it was 50k but 5k!!!!!

What else forms her estate? Car? Jewellery? Life assurance? Savings in her name (not joint accounts)? Premium bonds? Etc. They will have second call on these after the funeral expenses are paid. Yes it's not a huge debt but it was borrowed so they want their money back. If she genuinely has nothing in her estate (remember even clothes have a nominal value) then it is up to the company to decide whether to pursue if it was secured to the property (if it was unsecured I'm pretty sure they cannot claim on the house). I have a relative who died with debts and no significant assets (didn't own a property) and my mum who handled it all just had to show that all assets (eg his car) were sold and there still wasn't enough to pay for the funeral, my parents paid the rest, funeral expenses have first dibs on the assets under English law- I have no knowledge of Scottish law!