What happens if you die in debt?

[ravenAK]

Hoping someone can advise me here.

FIL recently died. He & step-MIL lived in a flat which originally belonged to step-MIL before their marriage. He owned very little - personal effects basically, & was always a spender rather than a saver.

Step-MIL has received a letter from a credit card company - FIL owed about £2k, & they'd like it re-paid.

Step-MIL didn't know about this - FIL 'didn't discuss money' with her, & they always lived off her earnings pretty much - FIL was 25 years older & a long-term invalid.

She's rung the CC people & they've said the debt should 'come out of the estate'. There really isn't an estate.

We've said we'll pay it if needs be - FIL would definitely not want step-MIL to be worried about this & she is, she's been through a wretched time with FIL's illness & death, & she isn't well off.

Does anyone know the legal position? Is the onus on CC company or step-MIl to prove the (non) existence of FIL's 'estate'?

If there is no estate, and your MIL is not on hte CC account then it will be written off.

I think it should be dealt with by whoever is dealing with his estate and sorting out probate. My understanding is that the debt, if there is no money to settle it from the estate, is cancelled on death.

AFAIK any debts go to the mext of kin so MIL is liable for this I'm afraid.

I don't know this for 100% sure though, wait for someone who knows better than me to come along before you hand over any cash!

Citizens Advice say:

If the person who has taken out credit dies before completing all the payments, any outstanding debt becomes a claim on their estate. A relative of the dead person should not offer to take responsibility for the debt before the estate has been settled.

This situation is very complex and help should be sought from an experienced adviser, for example, a Citizens Advice Bureau.

to bottom of page www.adviceguide.org.uk/index/your_money/debt/credit.htm#Death

sorry see www.adviceguide.org.uk/index/your_money/debt/credit.htm#Death

weird I used to be able to do those!

www.adviceguide.org.uk/index/your_money/debt/credit.htm#Death

No the debts DON'T pass to next of kin. Recently been in this position and there is a specific order to pay debt out of the estate. CC companies often lose out as they are bottom of the list below rent and utilities and loads of other creditors.

What might be debatable and I am not sure of the answer to is how much of the property in the house makes up his estate. As MIL is still alive (and it sounds as though it is essentially hers anyway) I don't think the belongings are split between her and him, they automatically pass to her - and as you say there is no estate IYSWIM. That is the only bit I am not so sure on.

No consensus there then!

It does seem rather unfair if step-MIL gets clobbered for it, after devotedly nursing a much older, ill & confused dh for several years.

If that's the outcome then dh & I will sort the bill, but as seededbiatch says I'm not terribly keen to pay up if legally the debt should be cancelled. I'm inclined to think the CC company probably did quite nicely out of FIL in his lifetime - it's a safe bet that he'll have been juggling minimum payments & getting screwed for silly interest...

I would expect the credit card company will likely write off the debt but I doubt very much they would do this without proof that there is no estate. I'd expect she would have to provide closing bank statements and any evidence to support where any funds have gone (funeral bill etc).

When my mother sorted out someone's estate last year all they required was for the executor to fill in a form to say that there was no estate to pay them from and they went away. Didn't ask again.

ravenAK - the debt does not go to the relatives. It goes aganst the estate and if there is nothng left that is it.

Under no cirumstances should anybody accept or agree to settle this debt except the executor of the estate against the deceased assets. The debt belongs only to FIL as long as no one else (i.e step MIL) signed with him in a joint loan agreement.

I have heard some debt management companies sometimes try to persuade relatives to take on debts of deceased people.

I work for an organisation that makes ethical loans to generally poor peole and we see an increasing number of old people who have deliberately built up debts over the last 10 years knowing they can get by on minimum payments with no intention of ever payng the debt back before they die.

ravenAK - the only remaining nagging doubt I have is whether MIL handed over a share of her flat to FIL. If that is so then he does have a share of an asset. Even worse if he secured a debt against the flat or if the CC does get an order from the court to secure the debt on his portion of the property.

ABetaDad, that sounds rather like a FIL stunt! . He'd've thought that an excellent wheeze.

However, step-MIL thinks that he'd run it up years ago, on good living & treating his family, probably, & was trying to get it paid off before terminal illness & confusion overtook him .

We're pretty sure the flat has always been in step-MIL's sole name. She's not terribly keen to discuss their financial affairs either, but dh coaxed out of her that she was worried about this CC business...

Thanks all, I'll pass the info on to step-MIL.