Decedent’s Debts: Frequently Asked Questions FAQ
Q: Am I responsible for my deceased relative’s debts?
A: Generally, you are not responsible for your deceased relative's debts. Debts usually belong to the individual who incurred them, and they are typically settled using the assets from the deceased person's estate. However, there are some exceptions, such as when you co-signed a loan or if you live in a community property state.Q: Who is responsible for my deceased relative’s debts?
A: The responsibility for a deceased person's debts falls primarily on their estate. The executor of the estate is responsible for settling the debts using the assets in the estate. If the assets are insufficient to cover the debts, the remaining debts may be discharged, and the creditors may not be able to collect further.Q: What if the deceased relative is my spouse, parent, or sibling?
A: Your relationship to the deceased person does not automatically make you responsible for their debts. However, there are a few exceptions: • If you co-signed a loan or jointly held a credit card, you may be responsible for those debts • If you live in a community property state and the debt was incurred during your marriage, you may be responsible for your spouse's debt. • If you are the executor of the estate, you are responsible for settling the debts using the assets in the estate, but you are not personally responsible for the debts.Q: Would I ever be responsible for my deceased relative’s debts?
A: In most cases, you would not be responsible for your deceased relative's debts. However, there are some exceptions: • If you co-signed a loan or jointly held a credit card, you may be responsible for those debts. • If you live in a community property state and the debt was incurred during your marriage, you may be responsible for your spouse's debt. • If you agreed to be responsible for the debt in some other way, you may be liable.Q: The credit card company or collection agency says I’m liable for the
debt. Is this true?
A: Before accepting responsibility for any debt, it's important to verify the accuracy of the claim. Some collection agencies may try to collect debts from relatives even when they are not legally responsible. Check if you co-signed the debt, live in a community property state, or have any other reason to be responsible for the debt. If you are unsure, consult with an attorney or financial advisor to help determine your liability. Important: The credit card company or collection agency just wants to collect money from any source they can. They don’t care who pays as long as someone does. Their agent may say whatever it takes to make you feel bound to pay the debt. Increasingly, collection agencies are specializing in collecting decedent’s debts because they have found that it’s easier to collect from the dead than from the living.Q: Can my deceased relative's creditors take my personal property or
assets to pay off the debts?
A: Generally, creditors cannot take your personal property or assets to pay off your deceased relative's debts, if you are not legally responsible for those debts. If the assets in the deceased person's estate are insufficient to cover the debts, creditors usually cannot pursue their claims against family members or others not legally responsible for the debt.Q: How are secured debts handled after a relative's death?
A: Secured debts, such as mortgages and car loans, are attached to a specific asset (e.g., a house or a car). If the deceased person's estate cannot cover the secured debt, the creditor may have the right to repossess or foreclose on the asset. However, the heir or beneficiary of the asset may have the option to take over the loan payments and keep the asset, provided they meet the lender's requirements.Q: How can I protect myself from being held responsible for a deceased
relative's debt?
A: To protect yourself from being held responsible for a deceased relative's debt: 1. Verify if you are legally responsible for the debt due to co-signing, living in a community property state, or any other reason. 2. If you are the executor, make sure to follow the proper legal procedures for settling the estate and paying off the debts. 3. Do not agree to pay any debts or make any payments on behalf of the deceased person unless you are legally responsible for the debt. 4. Keep your personal finances separate from the deceased person's estate. 5. Consult with an attorney or financial advisor if you are unsure about your liability.Q: What should I do if a collection agency contacts me about a deceased
relative's debt?
A: If a collection agency contacts you about a deceased relative's debt: • Ask for written verification of the debt and the claim that you are responsible for it. • Verify if you are legally responsible for the debt due to co-signing, living in a community property state, or any other reason. • Consult with an attorney or financial advisor if you are unsure about your liability. • If you are not responsible for the debt, inform the collection agency in writing that you are not legally responsible and request that they cease further contact. • Report any harassing or unlawful collection practices to your state attorney general's office and the Federal Trade Commission.Q: How do I find out if there are outstanding debts after a relative's
death?
A: After a relative's death, the executor of the estate is responsible for identifying and managing any outstanding debts. To find out if there are outstanding debts, the executor can: • Review the deceased person's financial records, such as bank statements, credit card statements, and loan documents. • Check the deceased person's mail for bills or collection notices. • Order a copy of the deceased person's credit report to identify any active debts or accounts. • Contact creditors directly to verify any debts that may not be apparent from financial records.Q: Can I inherit debt from a deceased relative?
A: In most cases, you cannot inherit debt from a deceased relative. Debts are generally settled using the assets from the deceased person's estate. However, there are some exceptions where you may be responsible for the debt, such as co-signing a loan, jointly holding a credit card, or living in a community property state. If you inherit an asset with an attached debt, such as a mortgage or a car loan, you may need to pay off the debt to keep the asset.Q: What is the order of priority for paying off debts from an estate?
A: When settling an estate, debts must be paid off in a specific order of priority, as determined by state law. Generally, the order of priority for paying off debts is: 1. Funeral and burial expenses 2. Estate administration expenses, such as probate fees and attorney fees 3. Taxes and other government debts 4. Secured debts, such as mortgages and car loans 5. Unsecured debts, such as credit card debts, medical bills, and personal loans 6. Any remaining assets can be distributed to the heirs or beneficiaries according to the terms of the will or intestate succession laws, if there is no will.Q: Can the deceased person's life insurance policy be used to pay off
their debts?
A: Life insurance policies typically have a designated beneficiary who receives the death benefit when the insured person passes away. The death benefit is generally not considered part of the deceased person's estate and is not used to pay off their debts, unless the estate is named as the beneficiary. In this case, the life insurance proceeds would become part of the estate and may be used to settle debts before being distributed to the heirs or beneficiaries.Q: What happens to joint bank accounts when one account holder dies?
A: When one account holder dies, joint bank accounts usually become the sole property of the surviving account holder. This is due to a legal concept called "right of survivorship." The funds in the joint account typically do not become part of the deceased person's estate and are not used to pay off their debts. However, creditors may be able to make a claim against the joint account in certain circumstances.Q: What happens to the deceased person's student loans?
A: The treatment of a deceased person's student loans depends on the type of loan: Federal student loans: If the deceased person had federal student loans, the loans will be discharged upon their death. The loan servicer must be provided with a certified copy of the death certificate to discharge the loans. Private student loans: The treatment of private student loans depends on the terms of the loan agreement. Some private lenders may offer a death discharge, while others may try to collect the debt from the deceased person's estate. If you co-signed a private student loan, you may be responsible for repaying the loan. It's essential to review the terms of the student loan and contact the loan servicer to determine the appropriate steps to take after the borrower's death.
THE BOTTOM LINE
If you start getting calls from creditors about debts seemingly owed by a deceased spouse, parent or other loved one, don’t take for granted that the caller is telling you the truth. No matter how nice or compassionate that caller sounds, don’t commit to anything. Instead, tell the caller that you are going to speak with your lawyer about your obligations and end the conversation. Call 1-800-939-0235 We can helpDecedent’s Debts: Frequently Asked
Questions FAQ
Q: Am I responsible for my deceased
relative’s debts?
A: Generally, you are not responsible for your deceased relative's debts. Debts usually belong to the individual who incurred them, and they are typically settled using the assets from the deceased person's estate. However, there are some exceptions, such as when you co-signed a loan or if you live in a community property state.Q: Who is responsible for my deceased
relative’s debts?
A: The responsibility for a deceased person's debts falls primarily on their estate. The executor of the estate is responsible for settling the debts using the assets in the estate. If the assets are insufficient to cover the debts, the remaining debts may be discharged, and the creditors may not be able to collect further.Q: What if the deceased relative is my
spouse, parent, or sibling?
A: Your relationship to the deceased person does not automatically make you responsible for their debts. However, there are a few exceptions: • If you co-signed a loan or jointly held a credit card, you may be responsible for those debts • If you live in a community property state and the debt was incurred during your marriage, you may be responsible for your spouse's debt. • If you are the executor of the estate, you are responsible for settling the debts using the assets in the estate, but you are not personally responsible for the debts.Q: Would I ever be responsible for my
deceased relative’s debts?
A: In most cases, you would not be responsible for your deceased relative's debts. However, there are some exceptions: • If you co-signed a loan or jointly held a credit card, you may be responsible for those debts. • If you live in a community property state and the debt was incurred during your marriage, you may be responsible for your spouse's debt. • If you agreed to be responsible for the debt in some other way, you may be liable.Q: The credit card company or
collection agency says I’m liable for the
debt. Is this true?
A: Before accepting responsibility for any debt, it's important to verify the accuracy of the claim. Some collection agencies may try to collect debts from relatives even when they are not legally responsible. Check if you co-signed the debt, live in a community property state, or have any other reason to be responsible for the debt. If you are unsure, consult with an attorney or financial advisor to help determine your liability. Important: The credit card company or collection agency just wants to collect money from any source they can. They don’t care who pays as long as someone does. Their agent may say whatever it takes to make you feel bound to pay the debt. Increasingly, collection agencies are specializing in collecting decedent’s debts because they have found that it’s easier to collect from the dead than from the living.Q: Can my deceased relative's creditors
take my personal property or assets to
pay off the debts?
A: Generally, creditors cannot take your personal property or assets to pay off your deceased relative's debts, if you are not legally responsible for those debts. If the assets in the deceased person's estate are insufficient to cover the debts, creditors usually cannot pursue their claims against family members or others not legally responsible for the debt.Q: How are secured debts handled after
a relative's death?
A: Secured debts, such as mortgages and car loans, are attached to a specific asset (e.g., a house or a car). If the deceased person's estate cannot cover the secured debt, the creditor may have the right to repossess or foreclose on the asset. However, the heir or beneficiary of the asset may have the option to take over the loan payments and keep the asset, provided they meet the lender's requirements.Q: How can I protect myself from being
held responsible for a deceased
relative's debt?
A: To protect yourself from being held responsible for a deceased relative's debt: 1. Verify if you are legally responsible for the debt due to co-signing, living in a community property state, or any other reason. 2. If you are the executor, make sure to follow the proper legal procedures for settling the estate and paying off the debts. 3. Do not agree to pay any debts or make any payments on behalf of the deceased person unless you are legally responsible for the debt. 4. Keep your personal finances separate from the deceased person's estate. 5. Consult with an attorney or financial advisor if you are unsure about your liability.Q: What should I do if a collection
agency contacts me about a deceased
relative's debt?
A: If a collection agency contacts you about a deceased relative's debt: • Ask for written verification of the debt and the claim that you are responsible for it. • Verify if you are legally responsible for the debt due to co-signing, living in a community property state, or any other reason. • Consult with an attorney or financial advisor if you are unsure about your liability. • If you are not responsible for the debt, inform the collection agency in writing that you are not legally responsible and request that they cease further contact. • Report any harassing or unlawful collection practices to your state attorney general's office and the Federal Trade Commission.Q: How do I find out if there are
outstanding debts after a relative's
death?
A: After a relative's death, the executor of the estate is responsible for identifying and managing any outstanding debts. To find out if there are outstanding debts, the executor can: • Review the deceased person's financial records, such as bank statements, credit card statements, and loan documents. • Check the deceased person's mail for bills or collection notices. • Order a copy of the deceased person's credit report to identify any active debts or accounts. • Contact creditors directly to verify any debts that may not be apparent from financial records.Q: Can I inherit debt from a deceased
relative?
A: In most cases, you cannot inherit debt from a deceased relative. Debts are generally settled using the assets from the deceased person's estate. However, there are some exceptions where you may be responsible for the debt, such as co-signing a loan, jointly holding a credit card, or living in a community property state. If you inherit an asset with an attached debt, such as a mortgage or a car loan, you may need to pay off the debt to keep the asset.Q: What is the order of priority for
paying off debts from an estate?
A: When settling an estate, debts must be paid off in a specific order of priority, as determined by state law. Generally, the order of priority for paying off debts is: 1. Funeral and burial expenses 2. Estate administration expenses, such as probate fees and attorney fees 3. Taxes and other government debts 4. Secured debts, such as mortgages and car loans 5. Unsecured debts, such as credit card debts, medical bills, and personal loans 6. Any remaining assets can be distributed to the heirs or beneficiaries according to the terms of the will or intestate succession laws, if there is no will.Q: Can the deceased person's life
insurance policy be used to pay off their
debts?
A: Life insurance policies typically have a designated beneficiary who receives the death benefit when the insured person passes away. The death benefit is generally not considered part of the deceased person's estate and is not used to pay off their debts, unless the estate is named as the beneficiary. In this case, the life insurance proceeds would become part of the estate and may be used to settle debts before being distributed to the heirs or beneficiaries.Q: What happens to joint bank accounts
when one account holder dies?
A: When one account holder dies, joint bank accounts usually become the sole property of the surviving account holder. This is due to a legal concept called "right of survivorship." The funds in the joint account typically do not become part of the deceased person's estate and are not used to pay off their debts. However, creditors may be able to make a claim against the joint account in certain circumstances.Q: What happens to the deceased
person's student loans?
A: The treatment of a deceased person's student loans depends on the type of loan: Federal student loans: If the deceased person had federal student loans, the loans will be discharged upon their death. The loan servicer must be provided with a certified copy of the death certificate to discharge the loans. Private student loans: The treatment of private student loans depends on the terms of the loan agreement. Some private lenders may offer a death discharge, while others may try to collect the debt from the deceased person's estate. If you co-signed a private student loan, you may be responsible for repaying the loan. It's essential to review the terms of the student loan and contact the loan servicer to determine the appropriate steps to take after the borrower's death.You Are Not Responsible for
a Decedent’s Estate Debts
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