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Deferred payments and paying them back

Discussion in 'Legal and financial issues' started by ZoeL, Jul 9, 2015.

  1. ZoeL

    ZoeL Registered User

    Jul 9, 2015
    1
    #1 ZoeL, Jul 9, 2015
    Last edited: Jul 9, 2015
    Hi All

    I'm new here, sadly my Aunt had to go into a home earlier this year.

    I've just signed the deferred payment agreement and hoping to let the property to gain some income toward the fees.

    The agreement says the debt must be settled if the property is sold - fair enough - or 90 days after death. My question is how on early are you able to sell a house and complete with the funds available to pay within 90 days?! I don't think that's long in the house-selling world.

    Actually I think my main question is does the income from rent go straight to the council to reduce the amount of debt owed - or does it accrue in my Aunt's account for paying the loan on sale or passing away?

    Zoe
     
  2. jenniferpa

    jenniferpa Volunteer Moderator

    Jun 27, 2006
    39,439
    You'd have to check, but in the past, interest was payable if you passed those 90 days.
     
  3. Il Gufo

    Il Gufo Registered User

    Feb 27, 2013
    203
    Property deferred charge

    Hi, my lovely Mum passed away in January, having moved into brilliant care home in October 2013. She had a flat to sell, so we applied to our local council for help with the fees until the property was sold. (Not sure if I'm allowed to say which council it is).
    It was relatively easy to get the funding, but not so easy to deal with once the property was sold. They hadn't put a charge on the flat when it went up for sale, even though we gave them solicitors details etc. Consequently they continued paying out even though I told them to stop as property had been sold. This meant I had to make separate payments to the care home and the council for some months. When I eventually managed to make them understand the situation, they even suggested carrying on making the payments and I could just continue to repay them each month!! They also insisted my solicitor should have told them when the flat was sold - and failed to see that as he had no knowledge of the charge on the house he had no reason to think he had to tell them. I finally made the final payments (as I thought) in October last year, having insisted that they stopped making payments by 15th September. I asked several times if the amount I was paying was the final figure, and was repeatedly told it was.
    Fast forward six months after Mums death, and I received a demand last Friday for just £2,000 for payments from 1st - 28th September. Luckily I still had the paperwork from the care home showing that the last contribution from the council was made on 15th September. I've yet to get in touch with them - am waiting to calm down. All Mum's money has been paid out in accordance with her will (a greatly diminished figure as the fees were over £3,000 a month for 15 months). So I'm guessing me and my two siblings will have to repay the council when a revised figure is received from them.
    I also received a demand from the DWP for overpayment of Mum's pension and attendance allowance of just over £600 two weeks ago, even though I informed them of her passing just two days after she died, and assumed they would stop all payments from that date. It is very difficult to even start to come to terms with losing Mum when these demands continue to arrive six months after the event.
     
  4. cragmaid

    cragmaid Registered User

    Oct 18, 2010
    7,963
    North East England
    I would have had to pay interest at the prevailing bank interest rate, had I not cleared Mum's before the time of her death. However the interest was payable only if the repayment was not made within 56 days AFTER completion of sale. ( in other words 8 weeks after I had received the proceeds of sale). The LA had to be notified of the intended sale and the intended date of completion in order that their figures could be given to the solicitor and be paid direct from the proceeds.

    I hasten to add...this was subject to the rules applying to our LA approximately 4 years ago.
     
  5. suenandbam

    suenandbam Registered User

    Jun 18, 2012
    2
    #5 suenandbam, Jul 9, 2015
    Last edited: Jul 9, 2015
    Leasing out the property

    I have done the same with my Mum's house and have let out the property to help with the repayments. You should bear in mind that you will need to notify the following bodies when the property is rented out:
    1. DWP as the rental will increase her income and may therefore affect her entitlement to benefits. My Mum lost her pension credit due to the increase in income.
    2. The council, as the proportion of monthly payment deferred depends on income. Again my Mum's monthly contribution increased in line with the rental income, but the deferred portion levied each month reduced accordingly so there will be less to repay when the house is sold
    3. HMRC as your Aunt will be receiving taxable income, you will need to complete a tax return to include the house rental. If you are decorating or improving the property before letting, remember to keep all the receipts to offset against rental income.

    If you look at your deferred payment agreement it usually says interest becomes payable after 90 days, however this interest only applies to the amount of deferred loan. The quickest way of selling the property would be through auction as the sale must be completed within 30 days of the hammer falling. Just make sure you set a reasonable reserve price.


     
  6. Pickles53

    Pickles53 Registered User

    Feb 25, 2014
    2,482
    Radcliffe on Trent
    #6 Pickles53, Jul 9, 2015
    Last edited: Jul 9, 2015
    I sold my mother's house as the executor of her will. Mum died in early November. The first person to see the house put in an offer within two days of it going on sale in early January. However, we could not exchange contracts and complete the sale until probate was granted. That took more than two months even though it was very straightforward.

    PS which might help some people in relation to El Gufo's point....if a notice is posted in the London Gazette by the executors, any creditors with a claim against the estate have to come forward within 6 months of the notice date. Debts which the executors were not made aware of by then cannot be enforced. This was recommended by the solicitor we used for mum's estate; I think it cost £99 but it was well worth it for the peace of mind. For the same reason, it was recommended that the estate was not distributed to the beneficiaries until the 6 months were up, so it's important for the notice to be placed early in the process of dealing with a person's estate.

    https://www.thegazette.co.uk/place-notice
     
  7. Pete R

    Pete R Registered User

    Jul 26, 2014
    2,046
    Staffs
    The New Care Act Guidance states that you do not have to repay in 90 days after death however steps must have been taken by the executor to place the property on the market or be in a position to pay off the debt by other means. The LA must be told of the death. They should work with you to find a solution after the 90 days, but if no steps have been taken then they can, as a last resort, cancel the DPA and proceed with Debt recovery.

    Obviously interest will accrue till it is settled. (that is unless your LA is like mine and do not charge interest).
    :)
     
  8. Pete R

    Pete R Registered User

    Jul 26, 2014
    2,046
    Staffs
    Just so you know.....DPA's before April remain the same as agreed at the time. The real changes in The New Care Act mean LA can charge interest throughout and levy charges for setting up and ending the agreement.:)
     
  9. Pete R

    Pete R Registered User

    Jul 26, 2014
    2,046
    Staffs
    Obviously I hope your Aunt lives a very long time to come.:) However if she kept the rent her capital would increase to over the £23,250 upper limit and the LA would look at ending the DPA. So she should be paying the LA before that happens and therefore reducing the debt.
     

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