Question
Not sure this is one for you....but if someone who has taken a loan out then dies and leaves an amount outstanding what is the position of the estate's executors with regard to paying the outstanding amount?Answer
The simple answer is that the estate's executors need to repay the loan before any remaining monies and assets can be distributed to beneficiaries.
There are small potential complications in that debts must be repaid in a certain order if the estate can't afford to settle them all and the issue of what happens to goods on a hire purchase contracts.
The order for repayment of outstanding debt is:
Mortgage
Rent arrears
Water rates
Council tax
Fuel bills
Hire purchase
Personal loans and credit cards
If debts were held jointly or guaranteed by someone else then the joint holder or guarantor will be responsible for continuing the debt repayments. Otherwise the deceased's estate is responsible for repaying money owed.
If the estate doesn't have enough cash to repay debts then assets, including property, will have to be sold as necessary. In the case of a property owned as tenants in common the deceased's share must be used, if necessary, to repay debts. When property is owned jointly, ownership automatically passes over to the survivor, but creditors can apply for a 'Insolvency Administration Order' to forcing the property to be split in half and sold, allowing them to reclaim money owed.
If all assets have been used and there's still outstanding debts then the lenders will have to write them off as they've nowhere else to turn to get the money.
If the deceased purchased goods via a hire purchase agreement they wouldn't have owned them until the last payment had been made, so the estate will have to either return the goods (making good any damage) or pay any outstanding balance. However, if over one third of the agreement has been paid, the hire purchase lender needs a court order to get the goods back.
Not sure this is one for you....but if someone who has taken a loan out then dies and leaves an amount outstanding what is the position of the estate's executors with regard to paying the outstanding amount?Answer
The simple answer is that the estate's executors need to repay the loan before any remaining monies and assets can be distributed to beneficiaries.
There are small potential complications in that debts must be repaid in a certain order if the estate can't afford to settle them all and the issue of what happens to goods on a hire purchase contracts.
The order for repayment of outstanding debt is:
Mortgage
Rent arrears
Water rates
Council tax
Fuel bills
Hire purchase
Personal loans and credit cards
If debts were held jointly or guaranteed by someone else then the joint holder or guarantor will be responsible for continuing the debt repayments. Otherwise the deceased's estate is responsible for repaying money owed.
If the estate doesn't have enough cash to repay debts then assets, including property, will have to be sold as necessary. In the case of a property owned as tenants in common the deceased's share must be used, if necessary, to repay debts. When property is owned jointly, ownership automatically passes over to the survivor, but creditors can apply for a 'Insolvency Administration Order' to forcing the property to be split in half and sold, allowing them to reclaim money owed.
If all assets have been used and there's still outstanding debts then the lenders will have to write them off as they've nowhere else to turn to get the money.
If the deceased purchased goods via a hire purchase agreement they wouldn't have owned them until the last payment had been made, so the estate will have to either return the goods (making good any damage) or pay any outstanding balance. However, if over one third of the agreement has been paid, the hire purchase lender needs a court order to get the goods back.
Read this Q and A at http://www.candidmoney.com/questions/question380.aspx
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