Are You On the Hook for a Deceased Loved One’s Debt?
When a loved one passes away, the last thing you probably want to think about is how you and your surviving family members will pay down any remaining debt. Yet, debt after death is common, with nearly three-quarters of Americans owing an average amount of $62,000 at the time of their deaths. Therefore, it’s important to understand your rights regarding a deceased loved one’s outstanding obligations to protect yourself and your assets.
Are You Responsible for a Deceased Relative’s Debt?
The good news is that, in most cases, you are not responsible for a deceased family member’s remaining liabilities. Though a person’s debts do not disappear when they pass away, the law protects surviving family members from having to repay outstanding obligations from their own funds or assets. Instead, the deceased’s estate must cover the remaining balances.
Understandably, your next question may be, but what if the estate does not contain enough money or assets to pay what is owed? In this case, and unfortunately for the creditors, the debt typically goes unpaid.
Situations In Which You Are Responsible for Outstanding Obligations
There are some circumstances in which you may assume liability for the remaining debts of a deceased loved one. Those situations are as follows:
- You cosigned the debt. If you cosigned a debt with the deceased while your loved one was still alive, and if all or a portion of the debt remains, you are on the hook for the remaining balance. This is also the case if you are a joint borrower, such as if you and the deceased held a joint credit card account. Per the law, you are liable even if you did not benefit from the debt.
- The state requires you to pay. Some states require surviving spouses to repay certain kinds of debt, such as medical debt.
- You live in a community property state. In community property states, you and your spouse own everything jointly — including debt. Unfortunately, this remains true even after death, meaning you inherit any surviving debt your late spouse incurred during your marriage. Community property states include California, Arizona, Idaho, Nevada, Louisiana, New Mexico, Washington, Texas or Wisconsin.
- You’re the executor of the estate of your late spouse. If you are the executor of your late spouse’s estate, you may have to repay your late spouse’s outstanding debts. This is the case if you owned any property together — regardless of your state’s community property laws — and if you failed to abide by state probate laws.
To fully understand your obligations when it comes to surviving debt, the best thing you can do is consult with an attorney or similar professional.
Can Debt Collectors Contact You?
Whether you are legally liable for outstanding debts, debt collectors may pressure you or other loved ones to repay surviving obligations. Collection calls will only add insult to injury following your loss. Fortunately, there are laws in place that protect consumers against unfair, abusive or deceptive collection practices.
That said, the Fair Debt Collection Practices Act does give collectors significant leeway regarding who they may contact following a debtor’s death. Collectors may contact you if you held any of the following titles in relation to the deceased:
- Parent of a minor child
Collectors may not discuss the debt with any other persons unless said persons had the power to pay down debts through the estate.
Debt after death can cause significant confusion and frustration for survivors. If a loved one passes away with outstanding obligations, it’s important to understand your rights and obligations.