For a friend, his dad died last year and left a secured loan with a CCJ restriction on the house. The house is in a joint owner with his mum.
Is there a way of cancelling the debt as there is no money in the estate?
ou ask a good question, and one that can get complicated due to some legal issues; your friend may wish to speak to an estate planner or solicitor regarding this.
I have a few questions that can help me give you and your friend some advice. You can post your answers in the comments section below.
You mention that your friend’s father died with a “secured loan with a CCJ restriction on the house”.
Was the original loan secured against the property, or was a Charging Order issued out of a CCJ being issued?
Either way, the debt/loan now is secured against the property.
How much was the loan?
How long if there was one, a Charging Order placed against the property?
How much equity is there in the property?
Was your friend’s mum on the original loan that is placed against the property?
Once a Charging Order is in place, it makes an unsecured loan, secured. So that when the property is sold, that creditor gets paid out of the proceeds, if there is any equity after the first mortgage is paid off.
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If your friend’s mum is a joint owner and listed as such on the land registry, she is then entitled to a portion of any equity. I state a portion, as it may be argued if she contributed to the property and its equity, what portion of any equity she may be entitled to.
On the surface, if she is a half-owner, then half any equity is hers unless she can show otherwise. However, the debt can be paid out of any portion of equity your friend’s deceased father may have had. If there is equity, he does have an estate.
If there is no equity in the property and no estate, then this is where it gets more complicated, and legal advice is needed.
Get back to me and we can look at this in more detail.