Is debt shared?
- Thread starter Guest2
- Start date
I would never have guessed the OP meant debt without the other posts.
Debt is only tied to the person on the contract. Any assets they own or own a part of may be used to pay that debt.
Unsecured loans don't suddenly mean your assets can't be used to pay it. It just means the bank aren't effective owners of the underlying asset. They can still pursue payment.
Credit card debt is unsecured for example. It isn't just wiped when you die.
https://www.thisismoney.co.uk/money/experts/article-5674869/What-happens-credit-card-debt-die.html
Debt is only tied to the person on the contract. Any assets they own or own a part of may be used to pay that debt.
Unsecured loans don't suddenly mean your assets can't be used to pay it. It just means the bank aren't effective owners of the underlying asset. They can still pursue payment.
Credit card debt is unsecured for example. It isn't just wiped when you die.
https://www.thisismoney.co.uk/money/experts/article-5674869/What-happens-credit-card-debt-die.html
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Caporegime
Ax me about my crippling dept..
Man of Honour
I had a kick up the bum recently.
My Mum died just before Christmas and me and my Sister found out that because we were 'named' (sorry not sure of the correct wording) we would have been responsible for any debts, luckily she had none and we'll end up with a bit of money.
This prompted my Sister to say that even though my Dad has been married to another woman for 30 years if I'm 'named' on his will I could be responsible for his debts and he's a heavy gambler.
My Mum died just before Christmas and me and my Sister found out that because we were 'named' (sorry not sure of the correct wording) we would have been responsible for any debts, luckily she had none and we'll end up with a bit of money.
This prompted my Sister to say that even though my Dad has been married to another woman for 30 years if I'm 'named' on his will I could be responsible for his debts and he's a heavy gambler.
You don't suddenly become responsible for another person's debt. It's just that the estate has to pay it off, i.e. it will come out of any potential inheritance.
Man of Honour
but what if there is no inheritance?
Then nothing to worry about.
Man of Honour
Excellent
For personal debt (consumer credit), debt collectors dont have any powers in this country. Only courts can enforce action and even then if you cooperate they wont force you to commit to pay more than you can afford.
There is so much misinformation in this thread....!
The only person liable for any debt is the person or persons which signed the credit/loan agreement, or any separate guarantee covering someone else's credit or loan agreement (e.g. a parent guaranteeing the mortgage repayments of their children). A spouse or partner is not liable for a debt which they have not signed.
Neither can a debt be transferred to the beneficiaries of a will (although as already stated, an attempt can be made by the lender to get repayment of a debt from the estate of a deceased person). The closest to a 'debt' would be any inheritance tax becoming due from beneficiaries of a will after they receive property or other non-liquid assets - hence why people often have to sell the assets in question to pay the tax due.
The only person liable for any debt is the person or persons which signed the credit/loan agreement, or any separate guarantee covering someone else's credit or loan agreement (e.g. a parent guaranteeing the mortgage repayments of their children). A spouse or partner is not liable for a debt which they have not signed.
Neither can a debt be transferred to the beneficiaries of a will (although as already stated, an attempt can be made by the lender to get repayment of a debt from the estate of a deceased person). The closest to a 'debt' would be any inheritance tax becoming due from beneficiaries of a will after they receive property or other non-liquid assets - hence why people often have to sell the assets in question to pay the tax due.
/\ This. Slightly surprised so many people have such a poor understanding of debt and finance in general. You can’t be financially liable for someone else's debt if you haven't specifically applied with them or agreed to b a guarantor, even if your partner/spouse dies, that's a probate issue for the executor of the estate to deal with. If someone defaults on a debt, a bailiff/HCEO may require a spouse/partner/housemate to prove ownership of goods/assets (statutory declaration time), but they can't chase a third party, even in death the executor isn't personally liable. An exception to the above is divorce where it's not uncommon for one party to take finance and the other party to retain the asset/benefit eg wife finances a car in her name and husband retains it post split, any settlement will take account of one party being left with £xxxxx of debt and the other having £xxxxx of linked asset, but as you're generally talking about a situation where both parties have assets, they tend to be offset against other stuff.
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Ahem - I know you meant to agree, but your typo says otherwise.
Just want everyone to be clear rather than confused.
Truth is courts can decide anything if you split up and have children.
If there are children involved any equity, bank accounts or savings can be apportioned however the courts decide if you let it get that far.
E.g. if you had £30k in assets (say house equity), and your partner had a £30k loan - The courts upon splitting and dependent on circumstances could say that the £30k should be used to clear that liability.
Particularly with children, if that debt or loan would hinder a partner rehousing it can be considered a need to clear it.
I had to forfeit close to £80k in equity to ensure I had a clean break because my ex-wife ran up debts in the two years we were separated and as described above meant she couldn't get a mortgage without them clearing...
If there are children involved any equity, bank accounts or savings can be apportioned however the courts decide if you let it get that far.
E.g. if you had £30k in assets (say house equity), and your partner had a £30k loan - The courts upon splitting and dependent on circumstances could say that the £30k should be used to clear that liability.
Particularly with children, if that debt or loan would hinder a partner rehousing it can be considered a need to clear it.
I had to forfeit close to £80k in equity to ensure I had a clean break because my ex-wife ran up debts in the two years we were separated and as described above meant she couldn't get a mortgage without them clearing...
Edited - Not sure if I can even blame auto correct for that oneAhem - I know you meant to agree, but your typo says otherwise.
Just want everyone to be clear rather than confused.
Pedantically this isn't quite the full picture. If you are an Executor to an Estate then you have legal responsibilities to handle the Estate appropriately. If you mishandle, or do not fulfill your duties properly (e.g. don't post proper notice of the death in official channels), then Executors can be held personally liable. Generally a solvent Estate shouldn't be much of an issue; issue official notices, pay any creditors out of assets of the Estate and distribute the rest according to the deceased's wishes. However, if the Estate is insolvent then there can be a priority order to pay creditors. In which case a prudent Executor should probably take advice to avoid the risk of personal liability.