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Joshua
Joshua, Lawyer
Category: Law
Satisfied Customers: 25358
Experience:  LL.B (Hons), Higher Prof. Dip. Law & Practice
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When someone passes away, the debts i.e credit card and loan

Resolved Question:

When someone passes away, the debts i.e credit card and loan pass onto the estate but how do the loan and credit card companies know if there is anything left and is there anyway of getting out of paying them ?
Submitted: 2 years ago.
Category: Law
Expert:  Joshua replied 2 years ago.

Joshua :

Hello and thank you for your question. I will be very pleased to assist you. I'm a practicing lawyer in England with over 10 years experience.

Joshua :

may I ask if this is a hypothetical query or if this is an actual situation you find yourself in please? If the latter, are you an executor or beneficairy of the estate in question please?

Joshua :

Would you like to continue?

Customer:

Hi,

Customer:

It was my Dad who passed away, me and my brother are the executor and beneficiaries of the estate.

Customer:

Sorry for the slow reply by the way, I didn't get the email to say you had responded

Joshua :

My sincere apologies for the delay in reverting to you and the technical glitch you have reported above. May I continue to assist with the above?

Customer:

yes please

Customer:

I didn't get an email again so I will just keep checking but please respond, thanks.

Joshua :

So sorry for the lack of emails.

Joshua :

As you will be aware you are not personally liable as executors for any debts. However the debts do as you say fall to the estate and the creditors will have a claim before beneficiaries on any estate assets for repayment of debts.

Joshua :

Is the estate solvent net of the debts do you think?

Customer:

Hi,

Customer:

Not sure what you mean by that. We have the money in our account and none of the debts have been paid

Customer:

My Dad had 3 credit cards each that have around 4k on and a loan for around 7k. He had around 60k left and this has been settled into a joint account of mine and my brothers.

Customer:

We sorted everything out ourselves by sending off a form

Joshua :

thank you. And the status insolvent if there are insufficient assets in the estate to pay the debts of the estate however from what you say, your father had more assets than debts and therefore the estate is quite solvent.

Joshua :

in terms of liability in respect of the debts, liability will fall to the personal representatives of your father's estate which from what you say are your brother and you. You are not personally liable to pay the debts providing you administer your father's estate correctly but rather you are responsible for settling the debts out of your father's assets. The only way in which you become personally liable is if you do not administer your father's estate correctly, for example paying out to beneficiaries without ensuring the debts are settled

Joshua :

creditors can become aware of the make up of the estate in 1 of 2 principle ways. if you obtained a grant of probate for your father's estate then you must declare the value of the estate as part of the probate return which is that the matter of public record. If you did not obtain probate, or even if you did, the creditors can also ask for confirmation from you in respect of the net value of the estate and if necessary, they can seek disclosure from you in terms of documentation evidencing any information you give. If they are unsatisfied with the information provided, they can seek an application to the court for disclosure. Creditors, if they are commercial creditors, will also have had access to your father's credit report which will contain some basic information with regards XXXXX XXXXX liabilities and will also have the benefit of any information your father gave to them as part of his application and they will compare this information to such information you provide them in deciding whether they are satisfied with any information you provide them with. Do remember that if you provide false information, you can be personally liable to pay the debts as personal representatives and if the creditors can demonstrate deliberate intention on your part to provide false information, this could also potentially amount to a criminal offence though the risk of this is probably minimal

Joshua :

in short, it is not really worth providing false information as creditors can relatively easily obtain as above if they are unsatisfied with information provided.

Joshua :

in terms of how to avoid debts, creditors as above have a claim against any assets in your father's name and there is no way to prevent this claim other than disputing the basis of the debt claimed had any assets been placed into a trust prior to your father's passing, those assets may have fallen outside of your father's estate and hence could have avoided a claim but it is not possible to retrospectively achieve this.

Joshua :

There is an order of priority in respect of how debts should be paid. The first priority is funeral expenses and administration expenses and after that unsecured creditors and finally, beneficiaries. if the personal representatives do not pay out from the estate in this order, they can be personally liable as above for any loss to creditors as a result

Joshua :

is there anything above I can clarify for you?

Joshua, Lawyer
Category: Law
Satisfied Customers: 25358
Experience: LL.B (Hons), Higher Prof. Dip. Law & Practice
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