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Debt and death

Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
If you are in debt when you die what happens to it? Does it get written off? I know student loans do but I'm also wondering about overdrafts and other loans.

Comments

  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    Yes I think so unless they can take it out of what you have left. That's not expert advce though.
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    It depends. I think, unless you have payment protection insurance, it can get passed to your next of kin. Don't quote me on it though!
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    kaffrin wrote:
    It depends. I think, unless you have payment protection insurance, it can get passed to your next of kin. Don't quote me on it though!
    I used to think that happened and asked my family and some friends if it was true and they said it's not but they could be wrong. They were adament though.
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    Aye, I just googled and it seems it's what unscrupulous insurance people tell you to scare you into taking out insurance! Rude.

    It does say that any debts you leave can be recovered from any assets you leave though.
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    Yeah I would expect that if you owe debts then they would be taken out of your estate. After all, say for example you have a massive mortgage on a house and then die, well it's hardly the bank's fault and yet your family would suddenly have no mortgage to pay off? Nah I don't think so. They'd have to sell the house or keep paying the mortgage.
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    So like if you are thinking you might be dieing soon would it make sense to pre-pay for your funeral expenses and / or coffin etc in advanced through the use of debt money or would they just take it back?
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    If you thought you were going to die soon give all your assets to someone else so the government don't take inheritence tax, or something like that.
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    Randomgirl wrote:
    So like if you are thinking you might be dieing soon would it make sense to pre-pay for your funeral expenses and / or coffin etc in advanced through the use of debt money or would they just take it back?

    If you thought you were going to die soon you could take out loads of credit, but also credit protection if you get sick or die. But if you take that out knowing you are sick then its invalid, and if you top yourself its invalid too.
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    If you thought you were going to die soon give all your assets to someone else so the government don't take inheritence tax, or something like that.
    You only pay that if you've got quite a lot of money though, not just if you are in debt or with little money I think.
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    Randomgirl wrote:
    You only pay that if you've got quite a lot of money though, not just if you are in debt or with little money I think.

    Exactly, inheritance tax starts at about £250K so its really only of concern if you have a house and/or assets of high value.
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    I'm not sure how much help this is but...

    In February, someone I knew died, and although he didn't own a house (had only moved back here when he was ill, and lived with parents - rented a flat before I think), he had a 05 plate Audi TT that had racked up a rather large amount of debt when he bought that brand new... and about £20,000 worth of debt from other means (this is including student loans he hadn't finished paying though)

    When he died, his car debt was written off (the bit he hadn't paid while in hospital) and the car was taken away. A fraction of his loans were written off (such as his student loan, as you said), but the rest was left to his mum and dad to pay. Luckily, his life insurance/SSP he'd been getting that he hardly touched/work pension that they claimed covered a large chunk of it, and I think they've nearly paid the rest now.
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    budda wrote:
    Exactly, inheritance tax starts at about £250K so its really only of concern if you have a house and/or assets of high value.

    A lot of people when they get old do have a house though... but yea :thumb:.

    At least you don't have to worry about who gets what then, you can divvy it up fairly. That would be cool.
  • Former MemberFormer Member Posts: 1,876,324 The Mix Honorary Guru
    Any transaction undertaken less than seven years before death is still eligible for inheritance tax.

    If you die in debt, then the debt is transferred to your estate. If your estate is smaller than the debt then that's the end of it, your family is not responsible. But creditors will harrass grieving families to try and extract the debt, and as so many people don't understand the law they cough up. Debt Collectors are all liars, folks.

    Creditors can, of course, seek an enforced sale of your property to release equity, if all your estate's wealth is tied up in the family home. That could result in your partner being booted out of your house, or them having to buy your share of the house in order to pay the creditors.
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