Am I Responsible for Unpaid Debts of a Deceased Loved One?

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Unpaid debts may haunt you.

No one likes unpaid debts.

They can feel suffocating.

The grief of losing a loved one is even worse.

According to a recent nj.com article titled “Is mom liable for my dead father’s credit card debt?,” no one wants to combine the two.

Unpaid debts can cause anxiety.
Certain unpaid debts are paid from the estate.

If you recently lost a loved one, the last thing you want to think about is finances.

Unfortunately, a nagging question keeps coming to mind.

Am I responsible for the unpaid debts of my deceased relative?

The short answer is “not likely.”

Typically, unpaid debts are paid through the estate of the decedent.

This is the case in most but not all states.

If you were co-signer on an account or loan, the debt belongs to you as well.

What happens if the estate alone is responsible for the debt?

The executor will begin settling these in the probate process.

The executor must notify lenders after the death.

The creditor card company and other creditors or even collection agencies will then contact the executor to claim outstanding balances.

The creditor cannot add fees while the estate is being settled.

The executor then pays assets from the probate estate.

Some assets are not included in probate.

These include retirement accounts, IRAs, and life insurance proceeds.

If this is the case, the assets may be sheltered from creditors.

Other assets may need to be sold to pay the debts.

What happens if the money is not available to cover these debts?

A credit card company may be unable to collect the full amount.

Credit card debt is typically not secured.

Neither you, nor the executor, are responsible for the debt solely owed by the decedent.

An experienced probate attorney can explain how debts are handled when settling an estate in your state.

Reference: nj.com (Jan. 15, 2020) “Is mom liable for my dead father’s credit card debt?”