What happens to debts when someone dies? How are debts and loans recovered by the lenders after a borrower passes away? A debt can be as small as 100 bucks for the credit card bill. It can be as big as millions of bucks for mortgage (or other fat) loans. Are the relatives or heirs of the deceased person legally bound to repay all or part of those debts, irrespective of whether they were actively involved in those debts? What legal channels can the lenders go through to recover their money? I am assuming such laws may not differ vastly across the countries. But still it will help a great deal if you mention the country whose laws you are explaining in the answer.
In Civil law jurisdictions, the heir of a deceased person will generally inherit all the possessions, rights and obligations - this may include debts. So if a borrower passes away, the lender will typicall find out who is the heir, and ask them to pay. The heir will be required to pay, and the creditor can use the usual channels (reminders, collection agencies, court judgements) to make them pay. However, if the inheritance is &quot;under water&quot; (has more debts than assets), there are ways to avoid having to pay the debts: In Civil law jurisdictions, acceptance of an inheritance usually means being liable for all the debts, too. Details vary between jurisdictions - in Germany, for example, acceptance of an inheritance is automatic, and a heir must file a document to refuse it (this is called disclaiming the inheritance). In France, in contrast, the default is to disclaim the heritage, but certain interested parties (such as creditors) can require a heir to formally make a choice, then the default is acceptance (https://www.service-public.fr/particuliers/vosdroits/F1199). In contrast, in the United States (which generally uses Common law), creditors are paid first, and the heirs only inherit what is left, in a process called probate. In that case, a heir need not explicitly disclaim an inheritance that is &quot;under water&quot; - they will simply not inherit anything. Note that the heir may choose to inherit certain debts in exchange for keeping certain assets - for example, if a home with a mortage is part of the inheritance, the heir may either choose to sell the home and pay the mortage, or keep the home and accept the mortage as debt. Notes: Even if inheritance is not automatic, the system usually allows a heir to disclaim it. There are other reasons for disclaiming an inheritance apart from debts, for example tax advantages, or the desire to grant the inheritance to a different relative. If a heir disclaims the inheritance, no matter the reason, the inheritance automatically passes to the next heir in line. If all potential heirs disclaim in turn (as would typically happen if the inheritance has more debt than assets), the inheritance will usually fall to the state. Then, the assets will be divided up among the creditors (similar to insolvency proceedings). As an exception to the rule above, the state does not have to pay outstanding debts - so that money would be lost for the creditors.
Regarding to your instructions concerning the funds in the account, it's hard to prove a negative. As far as I know there is no legislation that requires a credit balance to be retained. However, there may be some regulations or internal policies regarding the closure of home loans, which may preclude closure without some documentation or other process. But just because you can't cite legislation that requires you to do things, doesn't mean it doesn't exist. You don't ask the new bank to support their claims which contradict the old banks, because it works in your favour. With regard to the last instruction regarding your funds, the bank can and will provide you with a list of fees and charges applied to your account - it's called a statement. With regard to your explicit other option - is what the bank's doing essentially theft? - you can call it theft, but it's not. At worst it's conversion, the remedy for which is the recovery of the converted property, or damages equal to the value of the property. If you have attempted to resolve your complaint through the bank's internal dispute resolution processes (usually some kind of complaint process), you can also contact the Financial Services Ombudsman, who may assist with these situations. Finally, as for your further instructions, they are all void and unenforceable. 1. You cannot impose terms on the conduct of another party without their agreement. This is called a counteroffer or variance to their established terms which you will have agreed to at the time that you established the original loan. 3. You can never be compensated just for your time.
You can offset the amount but you must go to court to do it. The court can then grant you an offset. This document from a law office describes the details. The risk you run if you do not pay and do not do this properly is that she, with a valid judgement in her hand, can take enforcement action including garnishee of bank accounts and seizure of property (of course, you can do the same to her).
Yes, you can sell an interest in a debt; this is an alternative to paying a debt collection agency on recovery. The contract that you have with the debtor may have limitations of the transfer of rights and obligations under the contract that may prevent this. The value of the debt to the agency depends on the status of the debt and the credit worthiness of the debtor. If you have a judgement debt from a court, they don't come any more rock solid than that - the only limitation is the debtor's ability to pay. If the debtor has assets or a solid income stream an agency may pay 70-80% of the face value of the debt.
Tell your parents Given the circumstances it is a near certainty that the least he will do if you do not pay for the damage is make contact with them. It will be far, far better for you if they learn it from you rather than him. What could he do? He (or his insurance company) can contact your parents - he will almost certainly do this. He (or his insurance company) can sue you for negligence. Children are responsible for their own torts providing they have the capacity to recognize and avoid risk and harm - based on your question I have (and a court would have) no doubt that that you are. If you lose the case, and don't pay, he can have the government seize whatever you own in order to sell it to pay the debt you owe. If this happened in British Columbia or Manitoba he can sue your parents. He could report you to the police - they may or may not choose to prosecute if what you did was criminal: it probably wasn't but the police may investigate to determine this. If he is insured he may be required to notify the police.
If the parents own the house (as shown on the official deed) it will go as they leave it in their wills, or as the local law for intestate inheritance (no will) directs. Who paid all or part of the down payment will not matter. If the intent was for that to matter, then the child who provided the down payment should have been listed as partial owner, or some written agreement should have been made specifying the rights involved. Otherwise the down payment would be considered as a gift. If the child owns the house (as shown on the deed) it would not be part of the parents' estate, and their will(s) would not affect it. It would remain the property of the child. If the down payment was a loan rather than a gift, as shown by a written agreement of some sort, then that debt would be an obligation of the estate, to be paid before any legacies were distributed.
That really sucks. I've had similar experiences when handling the probate proceedings of lawyers who were not good about returning original wills to clients. I am providing an answer under general principles without researching Oregon specific accounting, record retention and probate laws, to at least give you a start although I recognize that a better answer would research these questions. The accounts/clients from her business were sold to another woman. Is it legal for us to transfer everything to her possession? Probably yes. There should be a government agency in Oregon that regulates accountants that has rules regarding that question. The linked rule seems to govern this situation. It says in Rule 801-030-0015(d) that: (d) Custody and disposition of working papers. (A) A licensee may not sell, transfer or bequeath working papers described in this rule to anyone other than one or more surviving partners or stockholders, or new partners or stockholders of the licensee, or any combined or merged organization or successor in interest to the licensee, without the prior written consent of the client or the client’s personal representative or assignee. (B) A licensee is not prohibited from making a temporary transfer of working papers or other material necessary to the conduct of peer reviews or for the disclosure of information as provided by section (1)(b) of this rule. (C) A licensee shall implement reasonable procedures for the safe custody of working papers and shall retain working papers for a period sufficient to meet the needs of the licensee’s practice and to satisfy applicable professional standards and pertinent legal requirements for record retention. (D) A licensee shall retain working papers during the pendency of any Board investigation, disciplinary action, or other legal action involving the licensee. Licensees shall not dispose of such working papers until notified in writing by the Board of the closure of the investigation or until final disposition of the legal action or proceeding if no Board investigation is pending. So, a transfer to a successor firm appears to be permitted. What if she refuses to take the documents? Her probate estate could retain them and stay open, they could be returned to clients, or there could be a rule established by the Oregon body that regulates accountants that authorizes a central depository of such records. In Colorado, for example, in the case of law practices with no successors, original wills and estate planning documents can be deposited in the records of the court with probate jurisdiction that has jurisdiction over the territory where the decedent's practice was located. But, I could not locate any provision of this kind in Oregon law. Is it legal for us to destroy/shred/etc. the documents? In many cases, yes. Some states, by statute or regulation, and others by custom, allow business records to be destroyed as a matter of course, normally one year after the longest statute of limitations that could apply to a dispute where the records would be relevant (often seven years since the longest normally applicable tax statute of limitations is six years). Destroying tax returns is usually not a big concern because a transcript of the old tax returns can be ordered from the tax collection agency where they were filed. But, business records related to purchases of property and capital improvements and depreciation, and related to divorces, can be relevant for decades after they were created, so the more honorable course of action would be to make at least a cursory effort (such as a postcard sent to a last known address of each client with a deadline for requesting a return of their file) to return the files of clients that include original business records as opposed to mere copies of tax returns. Oregon has a seven year retention rule for most purposes pursuant to Rule 801-030-0015(e) which is linked above: (e) Retention of attest and audit working papers. (A) Licensees must maintain, for a period of at least seven years, the working papers for any attest or compilation services performed by the licensee together with any other supporting information, in sufficient detail to support the conclusions reached in such services. (B) The seven-year retention period described in paragraph (A) of this subsection is extended if a longer period is required for purposes of a Board investigation as provided in paragraph (d)(D) of this rule and OAR 801-010-0115(3). The referenced rule in that rule states: (3) Requirements upon resignation. Upon resignation, a former licensee is required to: (a) Surrender the CPA certificate or PA license to the Board; (b) Take all reasonable steps to avoid foreseeable harm to any client, including but not limited to providing written notice of resignation under this section to all clients and inform all clients of where client records and work papers will be stored and of the clients’ right to secure copies of all such records and work papers at no cost to the client; (c) Maintain client records for a period of at least six years, or return such records to the client; and (d) Continue to comply with the requirements of OAR Chapter 801 Division 030 pertaining to confidential information and client records. (e) For the purpose of subsection (b) above and unless otherwise required by the Board, a resigning licensee of a registered firm is required to give written notice to only those firm clients for which the resigning licensee was the sole or primary CPA on an engagement, an engagement leader, or the client relationship manager. In practice, the consequences of destroying a record that shouldn't have been destroyed are likely to be minimal, because any recovery would be limited to the assets of the estate and there is a time limit for making claims against estates which is quite strict, and your grandma has no license to revoke. But, again, the honorable thing to do in order to honor her legacy and do right by her former clients would be to either transfer the records to a successor firm or to attempt to return them, as she would be required to do if she had surrendered a license during life.
According to the US Courts website, not all debts need to be paid in full in Chapter 13 proceedings: The plan need not pay unsecured claims in full as long it provides that the debtor will pay all projected "disposable income" over an "applicable commitment period," and as long as unsecured creditors receive at least as much under the plan as they would receive if the debtor's assets were liquidated under chapter 7. 11 U.S.C. § 1325. If they can't pay even this reduced amount, then they probably don't belong in Chapter 13. If the court declines to confirm the plan, the debtor may file a modified plan. 11 U.S.C. § 1323. The debtor may also convert the case to a liquidation case under chapter 7.