Dealing with the debts of someone who has died can be a difficult and complex process.
There are steps you can follow in this situation to ease the difficult burden you will need to take on and ensure that the debts are taken care of correctly.
Inform creditors of the person’s death
To eliminate the additional stress of creditors sending letters demanding payments, the first step should be to contact them and inform them of the situation.
Additionally, you should ask for a letter stating the outstanding balance of the debt owed.
For individual debts, the creditors should pause the regular payments being taken from the bank account of the deceased until the debt has been settled fully.
For joint debts, the deceased’s name should be removed completely.
Another step you should take upon learning of the person’s death is to put a notice in a local newspaper as this will prove that you have tried to find out about any undisclosed debts.
The next step to take is to check for insurance that the deceased may have taken to pay off the debt.
If there is insurance, check the policies to see what can be claimed for debts.
Often, life insurance proceeds will go directly to a beneficiary and not be included within the estate but when there is no beneficiary nominated, then they could be used to pay off debts.
This will all depend on the terms and conditions of the policy so it is important to contact the relevant company and check this.
If there is no insurance
Make arrangements with the creditors to pay off the debts if they have not already organised this by making a claim on the estate.
For individual debts, find out the outstanding balance and then give the details of the executor or administrator of the deceased’s estate. They are responsible for ensuring that the debt is paid from the estate.
The executor will pay off any debts in priority order.
The debts should be paid off as follows:
If the estate does not cover the debt repayments, the most important will be paid off first.
Dealing with the debts of someone who has died can be difficult so it is important to make sure you are aware of the steps you should follow.
For more advice on this, contact us.