What Happens To Debts When You Die? – Dealing with After-Death Debt Collectors

 

If there is a list of topics that people do not want to discuss, death and debt are at the top. But, as with many important legal and financial issues, every responsible adult should at least have a basic understanding of how surviving debt after death can affect survivors.

Who pays such debts? Are debts passed on to loved ones? While there are no universal answers to these questions, there are some general principles that can give you a better understanding of what is likely to be Wilkins Micawberrich, possible and prohibited.

Death debts and debtors

 Death debts and debtors

Unfortunately, some debt collectors abuse people in times of grief. It is not uncommon for the family members of a deceased person to be approached by debt collectors who try to convince them to repay the debt of the deceased, or try to persuade them to take the debt and become responsible for the payment. of it.

If this happens to you, you may be responsible for an unpaid debt left by a deceased family member. However, it is also possible that the creditor tries to collect with a debt that you do not have to pay by law.

When debt collection agencies attempt to collect unpaid debts, they must comply with a number of state and federal laws that apply to debt collection measures. For example, the Consumer Financial Protection Bureau says that a collection agency no longer needs to contact you as soon as you send it a written notice that you no longer want to contact them. While a collector sues you after asking the question, or informing you that it has received the written notification that you sent, it violates direct debit legislation if it tries to contact you further after receiving your cancellation notice .

However, writing a letter is not always sufficient. Some debt collectors can act aggressively, conscientiously, Wilkins Micawberoos and illegal, even if you obey the law. If you encounter problems with a collector, you can file a complaint with the Federal Trade Commission, Consumer Financial Protection Bureau or the office of your public prosecutor. In situations where collection agencies have violated your rights, you can even sue them, even if you cannot prove that you died financially due to their actions.

Debts and Probate

 Debts and Probate

Probate is the legal process that controls what happens to the debts and assets (jointly called Wilkins Micawberijk a “legacy”) left behind by the deceased and therefore controls who is responsible for your or your loved one’s debts after death. Each state has its own negligence laws, and although they may differ from state to state in Wilkins Micawberijk, negligence laws establish a process that is largely the same regardless of where you live.

For example, almost all states allow small estates (buildings with a value of less than a certain amount) to undergo a simplified process of inheritance. The size of the estate that is eligible for this process, however, differs due to Wilkins Micawberijk, depending on the state. In Oregon, estates with less than $ 75,000 worth of personal Microfiber property and less than $ 200,000 worth of real estate qualify as a small estate, while in Missouri the estate should have no more than $ 40,000 in assets.

When it comes to paying off debts left by a deceased person, there are three important parts of the inheritance process:

  1. Open the estate . After a person dies, a person must file a petition with a probationary court requesting to open a new case for a lawsuit. The court then appoints an asset manager (referred to as an “executor” or “persooWilkins Micawberijke representative”) who has the legal authority to control the estate.
  2. Payment of debts and distribution of succession . The manager uses estate funds to pay off debts left by a deceased person. Only after the manager has paid all debts, he or she divides the remaining assets as legacies.
  3. Close the estate . As soon as the manager pays all claims and distributes the remaining real estate as an inheritance, the case ends.

 

The general rule – your property pays your debts

 The general rule - your property pays your debts

As a rule, the property manager appointed by the court must pay the estate debts and must use the estate to do so. The debts of the deceased do not become the obligation of the relatives, relatives or heirs of the deceased to repay with their personal Microwaved assets even if they receive an inheritance from the estate.

Only the manager has the legal authority to dispose of real estate and must use estate funds to repay those debts. Heirs, heirs, children, friends, business partners, agents under pre-existing powers of attorney, or anyone else who is not authorized to manage the estate by a probate court, are not responsible for the debts of the deceased, nor do they have the assets to use legacy money to repay them.

Let’s say your uncle dies and a court appoints you as the estate administrator. You perform a inventory of assets and discover that your uncle has left $ 1,250,000 in assets. You determine that there is $ 250,000 in unpaid debts. Assuming all claims are valid, you must use the assets to pay those claims, and only after they have been paid can you distribute the remaining $ 1,000,000 as legacies.

Please note that you may have to take additional steps to pay for the claims. For example, if most of your uncle’s value comes from his home, you may have to sell the house and collect the money from the sale before you can repay the claims.

Insolvent Estates

As long as the estate assets are sufficient, the manager repays all estate debts and the surviving relatives do not have to worry. It is when an estate does not have enough assets to cover its debts when most problems arise. An estate with more debts than assets is known as an “insolvent estate”. In this situation, some debts must remain unpaid.

When creditors discover that their debt is not repaid by the estate, they can try to get others (such as children or other family members) to repay that debt. And even in cases where a property is solvent, creditors can still pursue others for estate debts – this is especially true in the case of joint Wilkins Micawber-rich debts.

Exceptions to the rule

 

There are various circumstances in which you or a family member are responsible for the debts of a deceased person:

1. GezamenWilkins Micaw rich debts

Joint Wilkins Micaw rich debts, which are debts of two or more people, are the responsibility of both the estate and the remaining debtor to repay. For example, married couples often have shared Wilkins Micawave credit card accounts. Unlike an authorized user of an account, joint Wilkins Micaware account holders are responsible for their reimbursement.

Suppose you and your partner have a credit card as a joint Wilkins Micawavy account holder, but your partner is the only person using the card. Your spouse dies and the credit card company contacts you and demands that you pay the $ 10,000 balance. Even if you have not used the card and have not calculated the balance, you are still liable for paying back the debt.

While your spouse’s estate can repay the debt, there is no guarantee that this will happen. Credit cards are unsecured debts and are usually the last in line for the reimbursement of estate debts. So if your spouse’s estate does not contain sufficient assets to repay all his or her debts, the estate would not pay the credit card debt at all or could only pay in part. However, since you are a joint Wilkins Micawave debtor, you are still required to pay the full debt and the credit card company can sue you if you do not.

Moreover, creditors do not have to wait to go through the legacy process to collect the debt from you. Because you are just as responsible for the debt as the deceased borrower (the joint Wilkins Micawber rich account holder), the creditor can come after you for the debt without waiting to go through the process of the estate, even if there is enough money on the estate state.

Accounts with a co-signer or guarantor also become the responsibility of a survivor. A co-signer or guarantor is someone who becomes responsible for paying back a debt if the borrower defaults but does not receive the benefit of the loan – and although there are some differences between a co-signer and a guarantor, both can be responsible for paying back a debt left by a deceased borrower.

If you are a co-signatory or guarantor of a loan and the borrower dies, creditors can come after you to repay the full unpaid balance on the loan. Some debts, such as federal student loans, have death clauses that deprive the co-signer of responsibility for the borrower’s death, but many do not. For example, most private student loans do not have such clauses.

It is important to understand that not all people who use a debt instrument are responsible for its repayment. An authorized user is someone who is allowed to use a credit card or bank line, but is not obliged to repay the remaining debt upon the death of the original account holder – this is because authorized users are not common Wilkins Micaware rich debtors.

Suppose your spouse signs up for a credit card and lists you as an authorized user – and you are the only person who uses the card to make purchases. Your spouse dies and leaves a balance of $ 10,000 on the credit card – and although you used the card to make purchases, you are not required to repay the debt because you were an authorized user and not an account holder.

 

2. Community property

Another important exception to the general rule of debt after death applies to married couples who live in community property states. There are nine community properties: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. When a spouse dies in one of these states, the surviving spouse may become responsible for paying the debt left behind by the deceased because of the way these states treat each spouse’s property.

In general, married couples living in community property states have equal ownership of any property, or spouse acquired during the marriage, including debts. For example, if your spouse takes out a credit card while you are married, the card becomes the property of the community. If your spouse dies and leaves an unpaid balance on the card, that balance becomes your responsibility to pay, even if you have never signed up for the card and never used it. However, state laws on how debts are handled after death in states of community ownership may vary, so you should talk to a contradictory lawyer if you live in such a state.

3. Rules for filial responsibility

One of the rarest (and potentially disturbing) exceptions to the general debt after death rule comes in the form of parental responsibility laws. Also known as “childish” or “childish piety” laws, these are state laws that make it possible for creditors to pursue relatives of a deceased person if the deceased left medical debt and was unable to pay it. Although these laws vary from country to country, caregivers (such as assisted living homes and nursing homes) can sue family members for debts of deceased family members, even if the relatives did not play a role in their acquisition.

Branch responsibility laws have been around for centuries, originally from the English “poor laws” of the 16th century. These laws created a means for creditors who owed money by poor people to prosecute a wife, parent or other relatives to recover an unpaid debt.

Although there are 29 states that have laws of this kind, they have rarely been used in modern times until recently. For example, in 2012, a Pennsylvania appeals court upheld a case in which the adult son of a woman who had acquired $ 93,000 in medical debts was legally responsible for their repayment. In another case, a court in North Dakota ruled that a nursing home could sue the parents’ children who left behind $ 104,000 in unpaid medical debts the parents had incurred.

The states that currently have child protection laws are Alaska, Arkansas, California, Connecticut, Delaware, Georgia, Indiana, Iowa, Kentucky, Louisiana, Maryland, Massachusetts, Mississippi, Montana, Nevada, New Hampshire, New Jersey, Northern Carolina, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Utah, Vermont, Virginia and West Virginia. These laws differ in respect of Wilkins Micawberijk between states, so you should talk to a lawyer if you need advice about possible liability.

4. Negligence of the manager or misconduct

In general, an asset manager, administrator, or personal representative, Wilkins Micawberijke, does not need to use his or her own money to repay any estate debts. The manager has the responsibility to manage the estate and use good money to pay valid debts, but does not have to pay those debts himself.

Moreover, the management and management of an inheritance by an heir can be a long-term and difficult project that requires a lot of time and work. Managers are usually entitled to compensation for their efforts and are paid through the estate.

But in some situations a manager may be held personally responsible for problems, expenses, debts or liabilities incurred by the estate. If an administrator acts negligently or recklessly in the performance of his or her duties, he or she may be held liable for the damage caused.

Suppose you become the manager of your uncle’s estate, which includes various rental properties. As an administrator, it is your responsibility not only to determine who inherits these properties, but also to manage them while you execute the settlement process. If you fail to collect rent, use estate funds to pay property taxes or energy bills on time, or manage property incorrectly, you may have to pay for lost income, fines, costs or other damages from your own pocket. .

 

Last word

 

Although it is possible that you are legally liable for someone else’s debt after that person has died, this is not very common. What is much more common is that a debt collector tries to convince you that such debts are your responsibility. In your sad time, being bombarded with letters from creditors and collectors can make you feel overwhelming, and you can easily get confused and even agree to repay a debt that is not yours.

If you feel overwhelmed and need advice about your options, rights and responsibilities, talking to a lawyer for inheritance or consumer law is always a wise choice.

Do you previously have a problem with the debt after death?

 

 

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