Death and debts

[sparkythecat]

I am the executor of the estate of one of my friends who recently passed away and am in the process of unraveling his finances.
He has an outstanding unsecured loan which is subject to a punitive 21.9% interest rate. I will be contacting the credit company to tell them about his death and the debt will be settled in due course.
My question is can the credit company upon being notified of his death continue to charge 21.9% until the time of settlement, or is the amount outstanding frozen at the time of his death?

[randlemarcus]

I don't think there's a hard and fast rule. All my mother's unsecured debt was frozen once I informed them. My father's car loan was written off, despite the estate having enough to pay it off, which was a pleasant surprise. Be more careful if the estate doesn't have enough money to pay it off, as the executors [I] may [i/] become liable if you don't get it right. Secured, taxes, unsecured debts, in that order.

[Derek Smith]

My experience is that if you phone the company, explain what has happened, say who, or rather what, you are, and refuse to be specific about amounts etc, other than you are still in the process of unravelling the intracacies. Mention that you want to know how much the estate is in debt. The conversation might come around to quick settlement, in which case, if you are certain, really certain, the estate will have enough balance, then say 'the sooner the better', leaving 'if the price is right' hanging in the air. They will know what you are after and that if they cooperate a little, they'll most likely get their money quicker.

The above poster mentioned writing off a debt. That's not been my experience, but you never know. Good on the company. However, I've asked for a settlement figure three times, and each time it has been lower than the outstanding amount, once by about 60%.

I've found companies very understanding. However, 21.9% might suggest they are not the most thoughtful of loan companies.

Best of luck, and sorry for your loss. Something I was told when I was executor to a loved relative was that I was doing him a service, the last I would be able to do, and that entrusting me with the role was a sign that he thought a lot of me. Helped a bit.

[Mrr T]

The loan contract is between the deseased and the loan company and will
I am sure end on their death. As an executor your job is to value debts at the date of death. So write to the loan company and ask for a settlement figure on the date of death. Include a copy of the death certificate because I am sure they will want to see it.

[mike-v2tmf]

I was under the impression any unsecured debt died with the debtors death

[TTmonkey]

mike-v2tmf said:

I was under the impression any unsecured debt died with the debtors death

If there is money in the estate they need to be paid. If there is nothing, they will be written off (ie, no one can inherit an unsecured debt). Although there might be room for negotiation.


A debt has to be a legal joint debt to pass on to a partner. Individual debts do not get passed on if there’s no estate to clear them.

[mike-v2tmf]

TTmonkey said:

If there is money in the estate they need to be paid. If there is nothing, they will be written off (ie, no one can inherit an unsecured debt). Although there might be room for negotiation.


A debt has to be a legal joint debt to pass on to a partner. Individual debts do not get passed on if there’s no estate to clear them.

I better start p1ssing my money up the wall then

[TTmonkey]

mike-v2tmf said:

TTmonkey said:

If there is money in the estate they need to be paid. If there is nothing, they will be written off (ie, no one can inherit an unsecured debt). Although there might be room for negotiation.


A debt has to be a legal joint debt to pass on to a partner. Individual debts do not get passed on if there’s no estate to clear them.

I better start p1ssing my money up the wall then

Some do borrow heavily when they know they don’t need to pay it back….

[Pica-Pica]

I would just advise the company that the person owing the debt has died. Ask for written details, do not make any offer to settle at this point, that can wait until you have the details, and have time to plan how to conclude everything. If you do not have them, get many copies of the death certificate, you will need these.

Commiserations, and best wishes with it all.

PS. My parents made sure there was little left, and thus probate was not needed.

[oldbanger]

When my sister died she had credit cards, catalogue balances and a subprime mortgage

The cards and catalogues all froze the accounts but the mortgage company continued to charge interest until the house was sold, so it can go either way.

Executors are liable for any unpaid debts if they were not dealt with properly. Eg if a debt wasn’t identified before beneficiaries were paid, or just wasn’t paid when it could have been, then that’s on you. If you are not sure if you have identified everything, it’s worth posting in the gazette as this would help you if someone comes out of the woodwork much later.

There is also a case study where a beneficiary elected to pay IHT for a property in instalments but then sold it and buggered off abroad - HMRC successfully went after the executors for the money

Edited by oldbanger on Sunday 13th June 15:50

[B235r]

When I done all of this for my mum I just asked all the company's to send a final bill & I payed off what I could on a first come first served basis

The only pita was the council who moaned & moaned they weren't going to get payed for the 1 day a week mum had a carer in as took them 3 months & repeated phone calls to get a final bill out of them & by that time everyone else had been payed & the funeral payed for so nothing left ended up just ignoring there letters in the end

Anyone else leftover just got a letter template I found online with theres no money in the estate & a photo copy of the death certificate

[Saleen836]

oldbanger said:

When my sister died she had credit cards, catalogue balances and a subprime mortgage

The cards and catalogues all froze the accounts but the mortgage company continued to charge interest until the house was sold, so it can go either way.

Executors are liable for any unpaid debts if they were not dealt with properly. Eg if a debt wasn’t identified before beneficiaries were paid, or just wasn’t paid when it could have been, then that’s on you. If you are not sure if you have identified everything, it’s worth posting in the gazette as this would help you if someone comes out of the woodwork much later.

There is also a case study where a beneficiary elected to pay IHT for a property in instalments but then sold it and buggered off abroad - HMRC successfully went after the executors for the money

Edited by oldbanger on Sunday 13th June 15:50

I'm sure someone else will confirm but unsecured debts can't be passed on to the executor of an estate,IHT is a different matter

[Pro Bono]

oldbanger said:

There is also a case study where a beneficiary elected to pay IHT for a property in instalments but then sold it and buggered off abroad - HMRC successfully went after the executors for the money

That sounds extremely unlikely.

It's the executors, not the beneficiaries, who decide whether to pay by instalments. The balance of the tax would have become due when the property was sold, and the sale proceeds would have been paid to the executors. They were hardly likely to have handed it to the beneficiary if there was outstanding inheritance tax to pay.

[MSR12c]

I regret to advise that you can have an insolvent estate. If that is the case, where there are assets insufficient to meet the liabilities, you should seek advice immediately from an insolvency practitioner. Google ones local to you and be sure they are a licensed practitioner, who will be properly bonded, insured and answerable to their regulator. This is as opposed to a debt counselor who can be anyone.

Most IP’s I know will give you and hour or maybe two of free advice.

[sparkythecat]

I'm not worried about an insolvent estate. Once assets are liquidated there will be more than enough to pay any debts. I just wanted to avoid those debts increasing by any more than they absolutely need to before they can be settled.

[valiant]

B235r said:

When I done all of this for my mum I just asked all the company's to send a final bill & I payed off what I could on a first come first served basis

The only pita was the council who moaned & moaned they weren't going to get payed for the 1 day a week mum had a carer in as took them 3 months & repeated phone calls to get a final bill out of them & by that time everyone else had been payed & the funeral payed for so nothing left ended up just ignoring there letters in the end

Anyone else leftover just got a letter template I found online with theres no money in the estate & a photo copy of the death certificate

I must admit I had a similar experience with my late mother’s council. You’d have thought that my mother was the first person to die and it was all new to them. Phone calls, emails, letters and all over trying to clear and close down council tax, estate management charges and a car parking space she rented.

Sent one final letter in the end saying as far as I was concerned the matter has been dealt with and what they did with their (fully paid up) accounts was now up to them. Haven’t heard anything since.

[oldbanger]

Pro Bono said:

oldbanger said:

There is also a case study where a beneficiary elected to pay IHT for a property in instalments but then sold it and buggered off abroad - HMRC successfully went after the executors for the money

That sounds extremely unlikely.

It's the executors, not the beneficiaries, who decide whether to pay by instalments. The balance of the tax would have become due when the property was sold, and the sale proceeds would have been paid to the executors. They were hardly likely to have handed it to the beneficiary if there was outstanding inheritance tax to pay.

https://www.bailii.org/uk/cases/UKFTT/TC/2018/TC06...

[B235r]

valiant said:

B235r said:

When I done all of this for my mum I just asked all the company's to send a final bill & I payed off what I could on a first come first served basis

The only pita was the council who moaned & moaned they weren't going to get payed for the 1 day a week mum had a carer in as took them 3 months & repeated phone calls to get a final bill out of them & by that time everyone else had been payed & the funeral payed for so nothing left ended up just ignoring there letters in the end

Anyone else leftover just got a letter template I found online with theres no money in the estate & a photo copy of the death certificate

I must admit I had a similar experience with my late mother’s council. You’d have thought that my mother was the first person to die and it was all new to them. Phone calls, emails, letters and all over trying to clear and close down council tax, estate management charges and a car parking space she rented.

Sent one final letter in the end saying as far as I was concerned the matter has been dealt with and what they did with their (fully paid up) accounts was now up to them. Haven’t heard anything since.

The council tax dept were great stopped the account & even refunded some money but whatever dept I was dealing with for carers was useless

[stuthemong]

oldbanger said:

https://www.bailii.org/uk/cases/UKFTT/TC/2018/TC06...

Naive, but if he's told the truth that is really really harsh of the brother. Totally shafted him. How anyone can act like this is beyond me.

[Derek Smith]

B235r said:

The council tax dept were great stopped the account & even refunded some money but whatever dept I was dealing with for carers was useless

I was given a house - long story - in which a woman lived with my uncle as carer. During my time in charge, I approached Lewisham Council for help regarding various mods to keep the house habitable, a mortgage if you will.

When she died the team from the council were very helpful, going well beyond their role. Fair enough, it wasn't their money they were dealing with, but they took a lot of the load from me, and helped with challenges to the gift. My general experience is that most people want to help. I've always asked rather than demanded, even when I've had the upper hand.

Those who are uncooperative can add to the stress and sadness of the situation. If you are petty-minded and want the joy of a little pay-back, you can mess them around a little. Not much, but enough so that they know you are doing so. You might feel a bit guilty afterwards, but it's generally a long time afterwards, and one can just shrug it off.