When someone passes away, it is not unusual for them to leave behind a few debts. Those debts don’t just go away because of that death. Instead, creditors will try to collect what they’re due. The way this is done depends on specific information regarding the account.
Many debts that decedents have will be settled by the estate. Creditors will have to file a claim with the estate administrator. Once that’s done, debts are paid in an order that’s set by law. This can be done by liquidating the assets that are in the estate to satisfy the debts. If the estate becomes insolvent, meaning there aren’t any assets to liquidate, creditors typically won’t be paid.
When are loved ones responsible for paying a decedent’s debts?
Loved ones aren’t responsible for paying the decedent’s debts unless they are a co-signer or joint account holder. If either of those conditions is present, the loved one will have to pay the debts because they’re liable.
Creditors sometimes contact the family members of the decedent to try to collect the debts. If that happens and the individual isn’t liable for the debt, they should direct the creditor to the estate administrator. They shouldn’t ever give out any personal or financial information to the debt collector.
Estate administration is a complex undertaking, so it’s usually best for an individual handling this task to have the assistance of someone familiar with these matters. This can help them to ensure they’re doing everything in a manner that represents the best interests of the decedent and their beneficiaries.