Many adults in the United States carry debt, which can include everything from secured debts like mortgages to unsecured debts like credit card balances. While some people think that debts die with the account holder, that’s not necessarily true.
When someone dies who owes creditors money, the creditor has the option of filing a claim against the estate. Once this is done, the estate executor has to pay debts in accordance with a priority order that’s set by law. They will sometimes have to liquidate assets to pay off debts. If the estate is out of money and assets, it’s insolvent, so creditor claims won’t be filed.
When are loved ones responsible for decedent’s deaths?
Loved ones typically aren’t responsible for a decedent’s debts. There are notable exceptions to this. For example, if the loved one is a joint account holder or co-owner, they will be held liable to pay for the debt. If anyone is contacted to pay the decedent’s debts and doesn’t believe they’re responsible, they should direct the creditor to the account executor.
What happens if the debt can’t be paid?
If the debt can’t be paid, the creditor will usually write the account off. Accounts that are secured by property, such as a car loan or mortgage, are handled differently. The creditor has the option to foreclose on a mortgage or repossess the assets that secure the account.
Taking care of all the duties related to an estate can be challenging, particularly if the estate is complex. Having assistance to make this process easier and to ensure compliance with applicable laws may be beneficial for individuals in this position.