Bereavement and Passing on Debts: FAQ

There is a lot of misunderstanding when it comes to bereavement and passing on debts. Many people are under the impression that if a parent or a spouse dies then the next of kin or partner can be held liable for the debts. In certain cases this can happen but there will be specific reasons why someone will be held liable when bereavement occurs.

If My Husband Dies Will I Be Held Liable For Credit Card Debts?

A spouse should not be held liable for credit cards or loans that were taken by a husband or wife. The only way that a surviving partner or for that matter a relative can be held liable is if they acted as guarantor for the finance agreement. They can also be held liable if the loan or credit agreement was co-signed as in a joint credit card agreement.

Will Payment Protection Insurance Cover the Bills?

If the deceased had payment protection insurance (PPI) then this should cover the outstanding balance. If PPI was in place and all payments were up to date then the remaining debt should be written off. The credit or loan companies should be informed as soon as possible after the death either by the executor of the estate or whoever is dealing with the deceased’s financial affairs.

Various Credit Companies Want the Original Death Certificate, I Only Have One

Most creditors will want proof of death and will usually ask for an original death certificate. Original death certificates can be obtained from the registrar’s office. These will be abbreviated death certificates and they will be officially stamped by the registrar. There is a small fee for this but it is worth obtaining a few copies to send to creditors. Some creditors will also accept a letter from a doctor.

My Wife Died Leaving Multiple Credit Card Debts; Will I Have to Write to Each Company?

This may sound like the last thing anyone wants to do when a loved one dies but credit companies should be informed as soon as possible of the death. By doing so all accounts can be frozen and the interest will stop from the date of the death. The best way to go about this is to set up a template letter on a computer with all of the details then simply change the address and account numbers on each letter before printing off.

You can also telephone credit companies and inform them and they will usually send out forms to be filled in regarding the death.

I Have Informed a Credit Company and They Are Still Demanding Payment; What Should I do?

If you are not liable for the debts then this would be classed as harassment. You should inform the company that they will be reported to the Office of Fair Trading if this harassment continues. If the estate and debts are being handled by an executor then you should inform the executor of this harassment. Creditors who are seeking repayment from an estate will have to wait until finances have been finalised and a decision has been made with regards to paying creditors.

Will My House Be Sold to Pay My Deceased Husband’s Debts?

If the property was in your name and not your husband’s name then a sale of the house cannot be enforced. If the property was owned as joint tenants then the property will be passed directly to you although there may still be a chance that it can be sold. If the property was owned under what is known as ‘tenants in common’ then your husband’s share of the house will pass on to his heirs. This will mean that you and the heirs will have to negotiate with the creditors to come to some form of solution.

My Husband Died and We Owned the Property as Joint Tenants, Am I in the Clear With Debts?

Not necessarily as these debts will not simply go away. Creditors have five years from the time of death within which they can apply for an Insolvency Administration Order if the debts are not paid from the estate. The order may enforce the division and sale of the property to pay the debts. Negotiating with creditors will be the best way to avoid the risk of having to sell the property.

Who Can I Contact to Obtain More Information on These Matters?

There are plenty of sources of free help and information available on debt after a relative or partner dies. The three most helpful agencies will be the Consumer Credit Counselling Service, the Citizens Advice Bureau and the National Debtline. All of these agencies can be contacted through their own websites.