Are You Personally Liable for the Debts of Someone Who Passes Away?
There is often nothing more catastrophic than the passing of a loved one. However, that trauma is often exacerbated by debt, and what happens when creditors of the deceased come looking to you to collect debts. Often, collectors will blindly look to the survivors to pay the decedent’s debts. Knowing your rights can help you fight back, and ensure that you aren’t paying debts you don’t owe.
How Debts Are Handled After Death
The problem often arises with spouses, who find creditors calling them when their husband or wife passes away. But as a general rule, if you didn’t sign for a debt, you won’t owe it when the debtor passes away. Bear in mind this means you personally—the creditor can in many circumstances go after the estate of the decedent.
General rules apply depending on the type of debt:
- Credit Cards – If you are a co-signor, or were an account holder with the decedent, you are responsible for the debt. However, if you were simply an authorized user, you are not, and the creditor must seek payment from the estate, only.
- Medical Debt – If you were a co-signor for any treatment that was rendered to the decedent, you could be liable for the debt personally. Note that being a health care surrogate, or the medical decision maker for the decedent, doesn’t obligate you to the debts—you must have agreed in writing to be jointly responsible for the debts of the decedent.
- Student Loan Debt – Much like medical debt, if you were a co-signor or guarantor, you may still be liable for the debt.
- Auto Loans – Again, you are only liable for the debt if you were a co-signor for the debt. However, just being on the title does not obligate you to pay the debt. It’s important to remember that just because you aren’t obligated to pay the debt, this doesn’t protect the vehicle. The creditor can often still repossess the car. Thus, for people who depend on the vehicle of the decedent, there can be problems if the car is lost.
Additionally, you shouldn’t assume that you can just keep making the payments that the decedent was making to keep the car. Many finance companies won’t allow that. If you have concerns, and are willing to keep paying the car payments, you should contact the finance company to see if arrangements can be made.
Once again, it’s important to remember that this all relates to you personally paying the decedent’s debt. Protecting the assets of the decedent is a different matter. So if the decedent has a valuable estate that you stand to inherit, creditors can still make claims on that estate. The result is that you may end up paying the debts indirectly, through the money that you stood to inherit.
Plan to protect your assets and those of any estate from creditor claims. Contact Tampa business and probate attorney David Toback to discuss your needs and make sure you understand how to best plan all areas of your estate.