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Interest
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brian


Posts: 2,002
Joined: Apr 2005
Post: #1
17-09-2009 03:29 PM

I am having to handle the prbate of a deceased friend.

3 lenders have promised to add no interest since date of death
1 lender ( who shall be nameless ) has said that interest will apply until loan repaid.
As 3 lenders offered to not charge I am wondering whether there are any industry guidelines.
Does anyone working in finance know please.

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roz


Posts: 1,790
Joined: Mar 2005
Post: #2
18-09-2009 04:21 PM

I don't work in finance but have been an executor and have encountered a range of odd things like this. I think it depends on the terms of each loan agreement. A mortgage for instance would still continue to accrue interest unless covered by insurance which pays off the loan on death. If someone has a life policy then usually this cancels all interest and actual capital debt on death. I would suggest that you get a solicitor to write to the banks asap to fully establish the terms. If someone has died owing money then the bank will claim against the estate, if that person left one.

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roz


Posts: 1,790
Joined: Mar 2005
Post: #3
18-09-2009 04:22 PM

I don't work in finance but have been an executor and have encountered a range of odd things like this. I think it depends on the terms of each loan agreement. A mortgage for instance would still continue to accrue interest unless covered by insurance which pays off the loan on death. If someone has a life policy then usually this cancels all interest and actual capital debt on death. I would suggest that you get a solicitor to write to the banks asap to fully establish the terms. If someone has died owing money then the bank will claim against the estate, if that person left one and it can quickly erode any capital left.

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brian


Posts: 2,002
Joined: Apr 2005
Post: #4
19-09-2009 08:11 AM

Thanks Roz
You might have the answer
The Bank still charging interest is for a mortgage
The 3 who are not are all credit cards.

Being very simple I imagined there would be one rule for the industry. Surely a debt is a debt.

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brian


Posts: 2,002
Joined: Apr 2005
Post: #5
26-09-2009 06:34 PM

I have received a reply from the one charging interest simply advising it is their company policy.
Surely there is an industry standard ?

Does anyone working in finance know please?

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roz


Posts: 1,790
Joined: Mar 2005
Post: #6
26-09-2009 07:35 PM

I don't work in finance so I'd better not say too much but the mortgage is a secured loan and credit cards arent, and different companies will have different policies anyway. I don't think there is necessarily an industry standard as these are completely different types of ' debt'. I would have thought that the mortgage needs to be redeemed as soon as possible either by selling the property and paying it off or if the property is inherited by someone then they may have the option of taking on the loan as well.
I would also check whether your friend had any life cover or insurance that meant that the debt itself was cancelled on death. We have that sort of cover and its quite common.

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Sherwood


Posts: 1,350
Joined: Mar 2005
Post: #7
28-09-2009 10:16 AM

I think the executor does not have to pay council tax (?for one year).
Check with the local council.

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brian


Posts: 2,002
Joined: Apr 2005
Post: #8
29-09-2009 02:45 PM

Thanks Sherwood
Lewisham Council have been good about everything . Unlike 3 utilities and the one lender I refered to.
Still cannot understand why there is not an industry standard on this.

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AMFM


Posts: 306
Joined: Oct 2007
Post: #9
14-10-2009 01:14 PM

I'm not in finance either but it seems to me that the issue is that these debts are all in different industries - each industry (I imagine) will have its own standards, hence the credit card companies all behaving in a similar manner.

It's undoubtedly frustrating, and without knowledge of your friend's assets and what he left and to whom, I suspect the best thing to do is to get the property on the market as soon as possible and get it sold so that the estate can pay off the various debts. I think your best bet might also be to get some legal advice from a probate solicitor, as they shoudl be able to give you a steer even if you don't instruct them to deal with the administration of the estate (by the sounds of it, there isn't much money in the estate so it might be a bit too costly to fully instruct solicitors).

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