It is always a sad and difficult time when someone close to you dies especially if it is sudden. In these times of distress and displacement the last thing people might think about are the debts of the deceased and how to repay them.
Don’t assume that the departed’s debts will be written off, because when a person dies their debts don’t die with them. Hopefully the recently dead has written a Will which contains a persons name who is deemed the executor. In cases where the deceased has not left a will, the next of kin is called an administrator.
The deceased ‘assets’ (money and property) known as their estate, has to go through probate overseen by the executor or administrator. By applying for a grant of probate you are asking for permission to distribute the departed’s assets in accordance of their will. Inheritance tax due is paid before any probate is granted.
If the departed’s estate doesn’t cover all of their debts, which is called an insolvent estate the executor must pay off what debts they can: Secured Debts like personal loans and mortgages, check for any insurance policies that could help pay these debts off most people when taking out a mortgage would also take out life cover.
Average Funeral Costs are on the rise, discretionary estate administration costs have increased significantly to £2,160 and rising. Unsecured Loans any credit cards personal loans council tax utility bills and repayment of overpaid benefits.
Once all accumulated debts have been cleared the beneficiaries will inherit what has been left in the will.
If you have joint debts with the deceased who is not covered by insurance, all names will be on the credit agreement or mortgage. This means the survivor of the joint agreement takes full responsibility for the repayment of any outstanding debts, contact the lender to check for the terms of the loan and if possible transfer future bills to your sole name if needed.
Also check the deceased bank account to see any repayments are being made, if so the account has to be frozen. If the recently passed away had debts solely in their own name contact the lender to make them aware of the death and ask them to send you a letter confirming the outstanding balance of the debt. If you feel overwhelmed by having to pay off debts by someone who has died recently deceased you can always seek help from:
Citizens Advice bureau
Step Change Debt Charity