Dealing with Debt when a person dies
Dealing with bereavement and the debt of their estate can be very complicated, emotional and stressful. There are important practical steps that you or an authorised person must take in this situation.
Registering the death
You may be eligible for assistance from the Social Fund to pay for funeral expenses, if you are on a low income. How much you get, or if you are eligible depends on your circumstances. For further information, visit ‘funeral payments’.
If someone signed as a ‘guarantor’ for the debts of someone who has died, the guarantor will become liable for the remainder of that debt.
Owner occupier property
Tenants in common
This applies when all owners of a property each own a specific share of the property as specified in the title deeds of the property. When an owner dies their share becomes part of their estate, it does not automatically pass to any surviving owners.
Each own all of the property and when one dies their share is automatically passed to the other. Hence the individuals share does not form part of their estate and is not available to creditors, or available to distribute to anyone named in the will.
If the estate is insolvent the creditor could apply for an insolvency administration order. They have a time limit of five years from the date of death. They can also apply to court to recover the deceased person's share of the property. You can use the Land Registry search to check how a property is owned. There is a small charge for this service.
A Joint tenant who lives in the property as their main home will automatically take over the tenancy. In some circumstances a member of the tenant’s family may be able to ‘succeed’ or inherit the tenancy, providing they had been living there when the tenant died.
Benefit overpayments after death?
If someone who dies was claiming benefits, you should contact the Department for Work and Pensions (DWP) and the local authority to inform them of their death. Alternatively this can be done through the ‘Tell Us Once’ service. Sometimes the DWP may have overpaid the person who has died resulting in a benefit overpayment. If the benefit overpayment has been worked out correctly, it can be recovered from the estate. You should seek help from an advice agency if you are unsure if the decision is correct.