Who is responsible for paying a deceased relative’s debts?

The loss of a loved one is difficult to cope with, but if the loved one left debts behind, it can be even tougher. It’s important to know who is responsible – and who is not responsible – for the debts of a deceased person.

This is even more true now than in the past, because creditors and debt collectors have become very aggressive lately about contacting a deceased person’s family members and trying to get them to pay debts. These debt collectors have been known to lie about a family member’s obligation to pay a debt. They sometimes have been trained to sound full of sympathy and compassion, but really they just want someone – anyone – to pay them money, whether or not the person actually legally owes it.

In addition, many scam artists will read an obituary and then contact the deceased person’s relatives, posing as creditors. They will try to get family members to provide Social Security numbers and other information, so that they can steal their identity.

If you’re being contacted by creditors about a deceased relative’s debts, an attorney can help sort out what you actually owe, and can take steps to force debt collectors to stop contacting you.

In general, when a person dies, that person’s estate becomes responsible for any debts the person owed. The person’s executor or personal representative is responsible for paying those debts out of the property of the estate.

The executor isn’t personally liable for the debts, of course, and doesn’t have to pay them out of his or her own pocket; they can be paid only out of the estate’s property.

So in general, no relative of a deceased person should have to pay any debts, unless that person is independently liable for them because he or she co-signed a loan or jointly assumed an obligation.

Here are some specific examples:

What if the deceased person had a mortgage? Unlike many debts, a home mortgage is a “secured debt,” meaning the lender has a right to foreclose on the real estate if the loan isn’t paid off.

If the deceased person had a home mortgage, then the result depends on whether someone else co-signed the mortgage. For instance, if a married couple jointly owned a house and both signed a mortgage, then the surviving spouse would get the house, and would be responsible for the mortgage payments.

If the deceased person was the only signer of the mortgage, then typically, whoever inherits the house would receive it subject to the mortgage. Depending on the terms of the mortgage, the heir might be able to simply assume the payments. In other cases, the lender could demand full payment right away, in which case the heir might need to sell the house, pay off the lender, and keep any remaining proceeds.

What about car payments? Like a home mortgage, a car loan is usually a “secured debt.” Thus, whoever ends up inheriting the car will typically inherit it subject to the obligation to pay off the lender. (An exception would be if the person’s will says that the executor should pay off the loan, and the estate has enough assets to do so.)

If someone else besides the deceased person co-signed the car loan, then the lender might be able to require the co-signer to pay off the loan, because that person signed the agreement.

If the car is worth less than the amount of the outstanding debt, it might be wise to simply ask the lender to repossess the vehicle. Once the vehicle is repossessed, the lender can’t collect anything else from anyone.

What about credit card debt? Responsibility for credit card debt depends on whether someone else was a joint owner of the card. If someone else was a joint owner, then the creditor can collect from either the estate or the joint owner. Usually the estate will pay the debt, but if it doesn’t (for instance, if there aren’t enough assets in the estate), then the joint owner is responsible.

But be careful: A “joint owner” is different from an “authorized user.” Just because someone’s name is on a credit card doesn’t mean they’re a joint owner. They’re not a joint owner unless they actually signed an agreement promising to be responsible for any charges. Otherwise, they’re not liable.

(Note: There is an exception in some states that can make a spouse responsible for certain credit card debts even if he or she is not a joint owner.)

What about medical bills and other debts? Unless someone else signed an agreement promising to pay these debts, only the estate is responsible for paying them. If the estate doesn’t have enough assets to pay them, then the creditor is out of luck. Relatives of the deceased person have no legal obligation to repay the debt…even though creditors will sometimes try to make them think otherwise.

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