THE UK INSOLVENCY HELPLINE

WHAT TO DO ABOUT DEBTS WHEN SOMEONE

DIES
When someone dies, debts are

F
• The surviving owner could be ordered to pay the
recoverable from any assets or outstanding debts or risk having the house sold.
money left behind. This is known Half of the sale proceeds, after any mortgages were
as the “estate”. No one else has to

A
pay for the debts unless they are
already liable under the terms of
the original agreement, eg the debt
cleared, could be used to pay creditors unless the
court agrees there are exceptional circumstances.
This makes it very important that a surviving owner

C
is in joint names or someone has
signed as a guarantor. Dealing with
an estate can be complicated. You
negotiates with any creditors to make arrangements
to pay the debts back and avoid this procedure
being used.

T may need legal advice. This

factsheet provides
information to help you decide
basic Tenants in Common

what to do about debts. • If you owned the property as “Tenants in

Common” the property has to be formally
transferred to the surviving owner. It is not

S
THE HOME
automatically transferred.

In this case, if there are debts, then the deceased

H
MORTGAGED HOUSE
person’s share of the house would be used to pay off
the debts. After the debts are paid, the person’s share
When you buy a house in joint of the house goes to whoever they left it to in a will. If

E
names there are two types of there is no will, then there are set rules for who will be
ownership status you could have. treated as next of kin and inherit the estate.

E Joint Tenants
How to Check

T
• It used to be the case that if you
owned property as "Joint
Tenants" then the property
would pass automatically to the
surviving owner. This meant
the property could not be sold
to pay off debts. From April
N 2001 the rules have been
changed. It is now possible for
creditors to apply for an
To find out whether you are Joint Tenants or Tenants
in Common, you would need to contact the Land
Registry to see if any restrictions on inheritance or
“succession” were registered. You can also check with
your original conveyancing solicitor to find out. If
your house is owned as Tenants in Common, you
would need to find out if there is a will. The joint
owner of the property could come to an arrangement to
pay off the deceased's debts to stop the house being

O
sold. They may have to take over the mortgage, or take
"Insolvency Administration out a new mortgage to keep the house. This would be
Order" within 5 years of the particularly important if they are living in the house, or
person dying, which effectively are going to inherit the person’s share of the house.
splits the property down the

21 middle as if it were a "Tenancy

in Common".

What to do about debts when someone dies. 1


What if your name is not on the mortgage?
If someone is living in the house who is not a part
owner or married to the person, check if there is a will
leaving the house to them. If not, then there may be a
problem staying in the house permanently. Specialist
legal advice from a solicitor will be needed.
Rented Homes
If there is someone else living in the property, they
may be able to take over the tenancy. Joint Tenants
automatically take over a tenancy. Otherwise a
husband/wife or partner, or even a member of the
tenant’s family, may be able to “succeed” or inherit the
tenancy, if they have been living there when the tenant
died. The time you have to have lived with the tenant
is different, depending upon the type of tenancy.
Check the tenancy agreement. You can contact
Shelterline on 0808 800 4444 for advice on housing
issues or phone us for advice.
Rent Arrears
If you take over the tenancy, this does not mean you
are liable for any previous rent arrears, unless you
were a Joint Tenant. Payment for rent arrears should
come out of any estate. You will, of course, have to
pay the current rent.
Benefits
The Department for Works & Pensions (DWP) should
be informed of the death and any order books returned
straight away. If you do not inform the DWP
immediately, there may be overpaid benefits that then
have to be paid back out of the estate. The council
should also be informed, if the person was claiming
Housing Benefit or Council Tax Benefit. There may be
arrears of benefit owed to the person which can still be
claimed.
There may be help available from the Social Fund for
funeral expenses, if you take responsibility for the
funeral and you are on particular benefits, such as:
Income Support, income based Job Seeker’s
Allowance, Pension Credit, Housing Benefit or
Council Tax Benefit. You can also claim if you are on
Working Tax Credit with a disability element or Child
Tax Credit if your award is higher than the basic
family element. Contact the DWP for advice.
What to do about debts when someone dies.
Fuel Bills
If there is jointly-owned or rented property, the person
still living there may be liable for fuel arrears.
Sometimes the fuel board tries to argue that you have
“benefited” from the fuel used so should pay for it,
even if your name is not on the bill. This is a difficult
area.  Phone us for advice. Otherwise, the bills are
recoverable from any estate.
If anyone is still living in the house they should
arrange for the ongoing fuel bills to be put in their
name.
Water & Council Tax
Water rates would be paid out of any estate, unless
someone else lives in the house. A joint occupier will
automatically be liable for any arrears, even if their
name is not on the bill. They will also be responsible
for the ongoing bill.
Council tax liability stops if no one is living in the
house. Tell the council as soon as possible. A partner
of the person who died will be liable for any council
tax arrears, even if their name is not on the bill.
They will also be responsible for the ongoing bill, but
will be able to claim a 25% discount if they are the
only adult in the house.
HIRE PURCHASE AGREEMENTS
Hire purchase agreements are only usual for cars and
some household goods. The goods do not belong to
you until the last payment is made. It is very important
to check the agreement to see if it is Hire Purchase
before returning goods to a creditor, as the creditor
would need a court order for the return of the goods, if
over a third of the agreement has been paid. Also, you
might be returning goods that actually belonged to the
person who died and that should be part of the estate.
 Phone us for advice.
CREDIT DEBTS
Creditors have to wait until the estate is sorted out,
then ask for payment. You may have to negotiate
payments to avoid losing your home, if the house
forms part of the estate and could be sold to pay the
debts. If it is clear that there is little or no money in the
estate, write to the creditors and suggest they stop
pursuing the debt, e.g. write the debt off.
Remember: you are not liable to pay the debt out of
your own income unless you signed the agreement
as a joint borrower or guarantor.
2
 .
THE ESTATE USEFUL CONTACTS
You may need to check if there are any of the
The following organisations may be of help to you:
following:
Age Concern England
• Bank Accounts: If this was in the person’s sole Astral House
name, no one will be able touch the money until the 1268 London Road
estate is sorted out. If you had a bank account in London SW16 4ER
joint names, you can usually still use the account Head Office: Tel No: 020 8679 8000
and should make sure all the direct debits and Information Line: 0800 00 99 66
standing orders for household bills are still paid, or www.ageconcern.org.uk
separate arrangements are made.
Cruse-Bereavement Care
• Pensions: Check if there was any personal pension, 126 Sheen Road
or an occupational pension through work. There Richmond
may be a lump sum, or insurance policy, that pays Surrey TW9 1UR
out on death, or a continued pension for Tel No 020 8939 9530
dependants. Helpline: 0870 167 1677
www.crusebereavementcare.org.uk
• Life Insurance: Check if there was any life
insurance. The mortgage may be paid off by an National Association of Widows
insurance policy, or automatically through an 48 Queens Road
endowment policy. Coventry CVI 3EH
Tel: 02476 634 848
• Income Tax: The Inland Revenue needs to be
contacted. There may be a tax rebate due if the Lesbian & Gay Bereavement Project
person was employed or self employed. Any tax Vaughan M Williams Centre
arrears owed would be paid out of any estate. Colindale Hospital
London NW9 5HG
PROBATE Tel 020 7403 5969

Someone who deals with everything owned by the
person who dies is called the “Personal
Representative”. If the estate is complicated, someone
may have to obtain “Probate”. This gives official
permission to deal with assets and pay debts.
If you may have to apply for probate, you should talk
to a solicitor who specialises in dealing with estates
and wills. It may be a good idea to see a solicitor if
there are assets but there is no will. You will need to
check the rules on who will inherit when no will was
made. These are called the “Intestacy Rules”
The Department for Works & Pensions (DWP)
publish a useful booklet called “What to do after a
Death in England & Wales”. This is available from
your local DWP or Post Office.
To find a solicitor, go to your local Citizens Advice
Bureau, or check The Community Legal Service
Directory by contacting Just Ask on 0845 608 1122 or
through the website: www.justask.org.uk.

REMEMBER: You can always contact us for advice about any difficulty you have in
dealing with your debts.

Freephone: 0800 074 6918

Website: www.insolvencyhelpline.org
© Copyright Money Advice Trust (updated March 2004)

Whilst we endeavour to keep our factsheets as up to date as possible, The UK Insolvency

Helpline cannot be held responsible for changes in legislation or for developments in
case law since this edition of the factsheet was issued.

What to do about debts when someone dies. 3