Outstanding Debt

[gangan34]

If I take out a bank loan and have also credit card debt,what happens if I die,is my wife lumbered with the outstanding debt?

[Barmaid]

No, the debt is paid out of your estate. If you have no estate, there is no way for anyone to reclaim it. However, be aware that if you jointly own the house in which you live the end result could be that your wife ends up lumbered to save the house.

[Spannerfiend]

It will depend on the terms of the loan.

You should declare any other debts to the lender.

[Barmaid]

No Spanner it doesnt. If Gangan signs a loan agreement and the wife is not a party to the contract she is not liable.

Her ONLY liability would be if the only asset was their jointly owned property and the lenders sought to recoup their money against his share after his death. In order to keep the property, the wife would have to come up with means to pay the debt.

[ummmm]

Would they just put a charge on the property?

[Barmaid]

If it is an unsecured loan, they wont put a charge on the property unless it is not paid. It is only if it is not paid that they will seek a charging order.

I was envisaging the case where gangan and his wife owned the property jointly and he died with no other assets. There are now provisions to enable creditors to claim against property even when owned as joint tenants.

[Spannerfiend]

I don't know where you got your info but, since the bank crashes, lenders now can make any loan terms to a couple or an individual in a marriage applicable to both parties on default. One of the questions an individual will now be asked, is if their partner is aware of them taking out a loan.

My information is 100% correct.

[Barmaid]

Sorry Spanner, I must have completely missed that change in the law to make non-parties to contracts liable thereunder just on the say so of the applicant (whether the spouse knows or not) and because the bank seeks to impose such terms on a non-party.

Could you provide me with your authority for that proposition, please?

[Spannerfiend]

My daughter is a Senior accountant with a major building society. She deals with such applications, and assures me that this is how they now process loans.

[mccfluff]

so you don't have any legal standing on which to base your claims then spanner?

my money's with barmaid....

[puzzlemaniac]

http://help.cleardebts.co.uk/partners_debts.html

[ummmm]

A senior accountant deals with loan applications?

[New Judge]

It may be, spanner, that the BS your daughter works for may perhaps insist on loans being taken in joint names where there are partners or spouses co-habiting, or something like that.

This article confirms Barmaid's advice:

http://www.thisismoney.co.uk/money/experts/article-2039944/If-husband-wife-run-credit-card-bills-passes-away-spouse-liable-pay-debt-estate.html

The debt can be taken from the deceased's estate (including his share of any joint assets) but in the event that there is no estate the debt cannot be transferred to the spouse if he or she was not party to the agreement.

Many retail financial institutions do not train their staff properly on aspects of the law which may effect their dealings with customers. This is particularly so in respect of the Data Protection Act and the Money Laundering Regulations. Some institutions "gold plate" the measures to ridiculous levels ("just to be on the safe side"), telling their staff that the law requires it when it clearly does not. The staff simply repeat this mantra to their customers. I was once told in a Bureau de Change in well know High Street travel agent that I must present my passport to change a twenty pound note into Euros to give to my nephew who was going on a school trip. They would be happy to change it into two tenners, but not into twenty-odd Euros without proof of identity. I went to the Post Office next door and got my Euros without any fuss.

I would not take as gospel anything I am told by such institutions and always check for myself. But then I'm a distrusting old sod !!!

[Spannerfiend]

New Judge has, in his first paragraph, identified what my daughter advised.

Her b/s will look very unfavourably on any loan application where the wife or partner of an applicant for a loan, is unaware that the first partner wishes to take such a loan without the other partners knowledge.

And yes.....accountants vet, but not approve, most applications to confirm financial honesty.

And on that...

[Barmaid]

Being aware of the loan and the loan being in joint names are two quite different things.

I am aware, for example, that Mr BM recently took out a loan. my awareness does not make me liable. Indeed, I didnt sign a thing.

[Spannerfiend]

We aren't going to agree........period.

[mccfluff]

because you are wrong...

[ummmm]

Did you read the links, Spanner?

And no need to be so rude.

[Svejk]

lol.