Will Wife Be Forced to Sell Home If I Die?

[Cookie05]

Hi. My wife owned a house before we got married. She’s worried that she may have to sell if I die as I have an outstanding debts and the creditors (or debt collectors) may demand payment from her.

I'm aware that they may retrieve money from my legacy. My question is: Can they demand money from my wife, or force her to sell? She had nothing to do with the debt, it was caused by my ex wife.

 

[Sarah J]

Generally, no. If the debt is incurred by you solely and not jointly with your wife, the creditors cannot go after your wife's assets. The creditors may go after your share of any joint assets but in this situation, where it sounds like your wife solely owns the property, she will not be forced to sell.

 

[Sophea]

Hi Cookie05,

Further to Sarah's comments, what happens to your husband's debts after he dies and who will be liable to pay them depends on whether:
• there are any assets (money or property) in his estate
• any debts are secured
• the debts are only in his name, or in joint names with you
• you have guaranteed the debts.

Generally speaking, if he has enough assets in his estate to cover his debt, then there will be no problem. Any excess after payment of his debts will be distributed to his beneficiaries in accordance with his will. However if the debt exceeds the value of his estate, then what usually happens is the estate is dealt with somewhat like a bankruptcy and his creditors will be paid proportionately. HIs creditors can only come after you for payment of a debt if you were a joint holder of a credit card or a joint debtor on a loan or you have gone guarantor on his debts or if his debts are secured by joint assets held by you both (as Sarah pointed out).

This form by the cancer council is actually very helpful in describing the process.
http://www.cancercouncil.com.au/wp-content/uploads/2012/06/Debts-after-Death-FS-NSW-June.pdf

Let me know if you have any questions.