Loan Liability Upon Death

LightningBolt

I have a friend whose father passed away without making a will. The house has been covered but there is an outstanding unsecured loan taken out in the fathers name only that the bank are chasing the family up on. I'm just wondering if anybody here could tell me where they stand on the information presented. If anybody could direct me to the relevant legislation regarding this area it'd be much appreciated also.

Edit: No action will be taken on any advice given. Any info will be used merely to ask for clarity when dealing with the acting family solicitor.

McCrack

The bank can sue his estate if the monies are not voluntarily repayed by the executor. Credit Unions are the only financial institutions as far as I'm aware that allow a debt to die with the person.

Our man in Havana

Is the bank saying that the family is liable for the debt? They will sometimes try it on and pretend that they are liable. I have had personal experience of these types of tactics.

The bank can only get money from the estate, they cannot chase the family for the debt.

LightningBolt

Yeah the bank is holding the family responsible for the loan. It was a unsecured personal loan with only the fathers signature on it and no guarantee attached.

When you say sue his estate, what happens if there is no actual estate to speak of?

Our man in Havana

The bank get nothing. End of story. Their hard luck.

Tell them to contact your solicitor and to leave your family alone.

LightningBolt

Bond-007 wrote: »

The bank get nothing. End of story. Their hard luck.

Tell them to contact your solicitor and to leave your family alone.

Thanks. I'll pass that info on to my friend and hopefully that helps her.

dats_right

Bond-007 wrote: »

The bank get nothing. End of story. Their hard luck.

Tell them to contact your solicitor and to leave your family alone.

Things aren't that simple I'm afraid. Whilst the family aren't per se responsible for the bank debt, if a Grant of Letters of Administration are extracted the LPR or Administrator IS under a duty to pay all lawful debts of the Estate before distributing the assets; and failing to do so will result in the Administrator being personally liable. If a Grant isn't required (i.e. if there is no property or significant assets) it is unlikely that the bank will recover the monies and the family are not responsible, but if a Grant is required the loan will have to be paid unless the Administrator wants to end up being personally sued and liable for the debt.

Our man in Havana

I was involved in a messy situation where my partners brother was killed in an accident where the only debt he had was the finance on his car, the car in question was destroyed in the accident.
Within a week of his death, the bank sent what could only be described as an oaf to collect the money. As the matter was subject to probate he was told that the bank would have to wait until probate was granted. He was having none of it and demanded that the family pay up now in cash. He was adamant that the family were liable for the debt and they must pay up now. He said he didn't care about probate or the legal system. He was told to get off the property and take what I said back to his master.

He was not impressed and only left once the Gardaí were called. This was a well known main stream Irish bank.

LightningBolt

Thanks for that again, the loan is on a car that's just laying up in the garden. The family have told the bank to collect the car and that they refuse to pay.

dats_right

That's a nice story Bond but even in your story, the bank will get paid in the end, it's more a case of the oaf sent to do the bank's dirty work being a bit dense.

LightningBolt wrote: »

Thanks for that again, the loan is on a car that's just laying up in the garden. The family have told the bank to collect the car and that they refuse to pay.

If the car is subject to a traditional 'unsecured' bank loan rather than hire purchase they will not have the slightest interest in taking up your 'offer', as the bank have no legal interest in the car and in any event the value of the car is unlikely to cover the outstanding debt.

I'm afraid, you shouldn't just be listening to the advice you want to hear because things aren't that simple. As stated already the debt is lawful debt of the deceased and should a grant of administration be required to access some of the other assets eg bank accounts, pensions, property, etc the ADMINISTRATOR WILL have to repay the bank the money owed and if they fail to do so tha bank will have the option of pursuing the administrator directly for the debt! If however, the estate is small and a grant isn't required then the bank cannot pursue the family for the debt and as a result will not have much prospect of recovering the debt.

Thoie

So what happens in a situation where, say, there's a loan out for 10k, but the complete total assets of the estate are 5k? Does the bank get that 5k, but nothing else?

And what about a situation where the loan is 10k, but there are assets of 5k + a house (worth 200k for the sake of argument). The house is co-owned with a spouse, and the mortgage insurance etc state that in the event of death, the mortgage is paid off and now belongs to the spouse. I suppose the bank gets the 5k, but can they chase the other 5k from the person who now owns the house?

Our man in Havana

Basically the bank will have to wait for its' money and they don't like doing that.

So what happens in a situation where, say, there's a loan out for 10k, but the complete total assets of the estate are 5k? Does the bank get that 5k, but nothing else?

Correct.

And what about a situation where the loan is 10k, but there are assets of 5k + a house (worth 200k for the sake of argument). The house is co-owned with a spouse, and the mortgage insurance etc state that in the event of death, the mortgage is paid off and now belongs to the spouse. I suppose the bank gets the 5k, but can they chase the other 5k from the person who now owns the house?

No. They would only get the 5K only.

Jo King

NON-FATAL OFFENCES AGAINST THE PERSON ACT, 1997

11.—(1) A person who makes any demand for payment of a debt shall be guilty of an offence if—


( a ) the demands by reason of their frequency are calculated to subject the debtor or a member of the family of the debtor to alarm, distress or humiliation, or


( b ) the person falsely represents that criminal proceedings lie for non-payment of the debt, or


( c ) the person falsely represents that he or she is authorised in some official capacity to enforce payment, or


( d ) the person utters a document falsely represented to have an official character.


I'd expect charges to be brought. In addition civil proceedings for trespass and defamation should issue.

dats_right

Jo King wrote: »

I'd expect charges to be brought. In addition civil proceedings for trespass and defamation should issue.

The suggestion that criminal charges could be brought is plainly ludicrous, for a start none of those elements appear to be present in what the OP has said and besides the offence has to be weighed up with the banks legal right to use reasonable means to ensure repayment of the debt. Also who exactly do you consider to have been defamed?

Anyway, moving away from 'folly law' and back to reality my advice from my two previos posts stands.

Jo King

There are grounds for a charge under 11 (1) (a). there is a clear attempt to cause alarm to the family of the debtor.

The only person the bank is entitled to contact in relation to the loan is the personal representative. Family members have absolutely no obligation for the debts of a deceased person. The only reasonable action open to the bank is to make a polite enquiry as to whether a personal rep has been appointed or is acting and to ask them to make contact. It would be too much to expect a bank to send a letter of condolence and wait at least a few weeks before attempting to make contact with a per rep.
The behaviour of the bank in the above scenario went far beyond what is reasonable in the circumstances.
The individual who called to the door was probably not a bank employee and it was defamatory of the bank to tell him that other family members were responsible for the debt and that they owed money and were refusing to discharge a debt lawfully due. In his conversation at the door this individual waqs salndering family members inter se in suggesting that any one of them had a liability for the loan.

Good Karma

I agree with Jo King.* The banks have to follow legal etiquette, and often they do not as they look for vulnerabilities which is the case here.* They are not morally conditioned and the bottom line for them is cash at any cost.
*
Most people are unaware of their rights when they owe money.* Yes they might have an outstanding debt, but there are rules in which the various authorities should take to recover these.* The reason these rules*apply are for good reasons.*
*
If you have someone who is mentally unstable and the status quo was to come belting at your door if you owed money, that person could be sent over the edge.* If someone is contacting you constantly for a debt, they should either bring you to court or accept the loss.* This is actually deemed harassment if the person feels upset by the velocity of their pursuance.*
*
The person can then sue for harassment.

dats_right

Jo King wrote: »

The behaviour of the bank in the above scenario went far beyond what is reasonable in the circumstances".

. Even if the behaviour of the bank is unreasonable in the circumstances and remember we only have one side of the story here, nonetheless as you will undoubtedly know, mere unreasonableness is almost never sufficient to justify a criminal charge rather it is a term more frequently encountered in the sphere of civil wrongs or torts. You maintain that

Jo King wrote: »

There are grounds for a charge under 11 (1) (a). there is a clear attempt to cause alarm to the family of the debtor.

and let's now for argument sake say the OP makes a complaint to the Gardai regarding an alleged offence on the grounds that: (As I think we can easily discount the other sub sections of the provision)

11.—(1) A person who makes any demand for payment of a debt shall be guilty of an offence if—
( a ) the demands by reason of their frequency are calculated to subject the debtor or a member of the family of the debtor to alarm, distress or humiliation.

Two points on that; firstly, I think it is safe to say that the legislature envisaged a situation nearing actual harassment when they refer to 'frequency'. A couple of phone calls or even a call or two to the door by the banks agent's to a) seek to enforce the debt, and b) establish the current situation is very unlikely to be viewed as constituting sufficient 'frequency' for the purposes of imposing criminal liability. Nothing the OP has stated could lead one to conclude that the bank's demands are of a sufficiently frequent manner.

Secondly, and in any event the frequency of the demands also require an element of mens rea, in that they must be 'calculated' to subject the family to alarm, distress or humiliation (and one would have thought that these effects would be judged on an objective standard). Are you seriously suggesting, based on the information provided, that the bank's efforts to enforce the debt were beyond a reasonable doubt so 'calculated' to cause these harms or effects? Because if you are, I doubt whether you would find a prosecutor, let alone a judge or jury to agree with that viewpoint. Anyway, it doesn't matter because this is the difference between academic law and practical law, because in 'real life', rest assured if the OP were to make a complaint on the basis of this section they would, after mininmal investigations (if they were lucky), be promptly told by the Gardai that it is a 'civil matter'.

In relation to your contention that there is a possible slander, I would say that even if we accept that there was (which incidentally I don't) but given your argument its best footing, where is the special damage? As you know slander is not actionable per se and requires proof of special damage (ie actual damage) and given that the publication of the alleged defamation was presumably only heard within earshot of family members it is highly unlikely that one can prove such special damages; and even if it were heard by neighbours or the likes what monetary damage will have been caused and more importantly what can be proved?

In any event, in my experience slander actions, even ones were the words complained of are totally outrageous, are always extremely risky and the risk-v-reward seldom stack up in favour of the plaintiff; not least because of the enourmous risks in terms of legal costs of an unfavourable judgement. What's more there will always be a dispute about the actual words spoken and unlike libel they are not plain to see in black and white and it will be for a judge to ultimately decide what words were actually spoken, unless of course, special damages run into the High Court scale in which case a jury may decide. But we really have already delved too far into the land of fantasy and make believe law without contemplating such folly as a defamation action!

In relation to the following sweeping piece of unsupported advice:

Good Karma wrote: »

The person can then sue for harassment.

I would say that you really should carefully consider the onerous and burdensome proofs required for proving harassment as provided for pursuant to section 10 of the Non-Fatal Offences Against the Person Act 1997. Once again there it is well illustrated the differences between what the layman might consider to be harassment and what the law actually considers harassment!

Good Karma

If you tell the company which is owed the debt not to call to your house or place of work, or not to contact you via phone and if this is not obeyed, you can sue for harassement.
This law is under debt collection act 1996.

Originally Posted by Dats_right
Secondly, and in any event the frequency of the demands also require an element of mens rea, in that they must be 'calculated' to subject the family to alarm, distress or humiliation (and one would have thought that these effects would be judged on an objective standard).

'calulated' - wheres the forumla for the calculations?? Is it based on the amount owed? No it is based on the mental capacity of the individual to cope with any sort of pursuance which is distressing.

So if even ONE visit or ONE phone call is distressing, then this law is applied, but convienently not many people are aware of their rights.

Our man in Havana

Try convincing a front desk Garda of this. They won't want to know.

dats_right

Good Karma wrote: »

If you tell the company which is owed the debt not to call to your house or place of work, or not to contact you via phone and if this is not obeyed, you can sue for harassement.
This law is under debt collection act 1996.

There is no such thing as the Debt Collection Act 1996, but in fairness to you, I think you are referring to the Consumer Credit Act 1995. I presume to section 46 , which provides some level of protection from a creditor or a person acting on his behalf from visiting or telephoning a consumer at at his place of employment or business unless the consumer resides at that place and all reasonable efforts to make contact with him have failed, or a consumer's employer or any member of the consumer's family unless that employer or family member is a party to the agreement.

Firstly, there is nothing contained in that Act prohibiting a a bank from visiting your home as you claim, although they cannot call on a sunday or public holiday or after 9pm on your home. Secondly, and of far more practical importance you will note that these provisions will only apply where the consumer hasn't given their consent to being contacted at work or contacting any member of their family. The protection is therefore far from absolute. This in effect means that a person is free to give their consent to being contacted or having their family contacted in such fashion, I hear you ask why would anybody in their right mind consent to the bank doing this? The answer is very simple and well known to anybody who has ever had dealings with banks and that is the bank's standard terms and conditions (the small print) required to take out the loand will invariably give them this "consent" rendering this protection virtually useless.

Good Karma wrote: »

'calulated' - wheres the forumla for the calculations?? Is it based on the amount owed? No it is based on the mental capacity of the individual to cope with any sort of pursuance which is distressing.

Totally incorrect and what's more you are completely missing the point. The mind of the individual or family being pursued is irrelevant. The only relevance for the pusposes of this offence is the mens rea of the person making the demands and in particular whether they are making the demands for payment of a debt whch by reason of their frequency are calculated to subject the debtor or a member of the family of the debtor to alarm, distress or humiliation. Accordingly, it is the person making the demands who must be, in order to commit the offence, be calculated to have intended to cause alarm, distress or humiliation. Clearly if the demands for payment were not calculated by the person claiming them to cause alarm, distress or humiliation no offence has been committed. The mere fact that the complainants have suffered alarm, distress or humiliation is not sufficient as the demands were not necessarily calculated to so cause these harms. These evidential problems will deter a prosecutor from pursuing such a minor issue. In reality this offence was created to criminalise unscrupulous moneylenders and their ilk from certain practices, it is not intended nor will it be used to prevent bank's or their agents from trying to recover lawful debts. Barking up the wrong tree is a phrase that springs to mind.

Good Karma wrote: »

So if even ONE visit or ONE phone call is distressing, then this law is applied, but convienently not many people are aware of their rights.

As stated the Consumer Credit Act provisions in this respect only apply if the consumer hasn't already given their consent, which they are virtually certain to have unknowingly given by signing up to the standard t&c's; and in relation to the Non-Fatal Offences Act provision it is very clear that "frequency" of demand is one of the prerequisites for criminal liability, so one or two calls or visits are highly unlikely to be sufficient.

Finally, when all is said and done and if I happen to be wrong (which I'm not), Bond summarises the situation very well indeed:

Bond-007 wrote: »

Try convincing a front desk Garda of this. They won't want to know.

Good Karma

Quote...dats_right

The protection is therefore far from absolute. This in effect means that a person is free to give their consent to being contacted or having their family contacted in such fashion, I hear you ask why would anybody in their right mind consent to the bank doing this? The answer is very simple and well known to anybody who has ever had dealings with banks and that is the bank's standard terms and conditions (the small print) required to take out the loand will invariably give them this "consent" rendering this protection virtually useless.

Good Karma
I think your interpretation of the law is a bit skewed. Yes a person may initially consent without conscience knowledge that they have, however, if a person who owes money asks a lender to desist in contacting them via phone or in person, then that company has to obide by these wishes. Their option then is to issue proceedings against the person to recover debt if they wish to do so through lawful means.
By not obiding, is to cause distress or harassment to the individual. Even if the person has consented to be contacted, they can ask at any stage not to continue 'personal' contact. The company must respect this.

The law states:
A creditor, owner or a person acting on his behalf shall not visit or telephone—
( a ) a consumer without his consent—
(i) at his place of employment or business unless the consumer resides at that place and all reasonable efforts to make contact with him have failed,
(ii) at any place,
(I) between the hours of 9 o'clock in the evening on any week day and 9 o'clock in the morning on the following day, or

Whether he has given consent originally, may allow an inital visit from the creditor, but should the debtor change his mind, he has the right to do this.

Good Karma

Sorry Dat right, it was the Consumer Credit Act I was thinking of!

Our man in Havana

All those protections are routinely signed away when taking out a loan etc.

Jo King

when a person dies the contract determines. Any permissions by the bank to call to a persons home are at an end. All the bank can do is to make the debt known to the personal representative who will be under a duty to discharge it before making distributions.
There can only be one reason the banks agent appeared at the house, in the immediate aftermath of the death, and demanded family members, none of whom was a personal representative, pay the loan off immediately in cash was to cause distress alarm and humiliation. What else were they doing? Refusing to leave the property until paid, and persisting in a completely unlawful demand is not a lawful means of recovering a debt.
If the local garda do not act, there is nothing to stop the family members bringing a private criminal prosecution.
It was common in the past for banks to insist on life assurance with the bank's interest noted, before releasing a loan. This was not unrelated to the fact that bank managers sold the policies and got a commission on the sale.