How to Manage the Debts of the Deceased

Handling Unresolved Financial Burdens Left Behind by Your Loved One

by Raymond Kim

The last thing on anyone’s mind at the time of death of a spouse, parent or sibling is their debt. Unfortunately, the debt of a deceased person doesn’t go to the grave with them. It is left behind for their loved ones to manage. If you are dealing with the debt of your loved one, there are some things you’ll need to learn. Sometimes, hiring a debt lawyer to assist you could be very helpful.

Typical Debts and Your Involvement

The usual financial obligations of a deceased persons consists of mortgages or rent, utility bills, property insurance, medical insurance, credit card bills and others (car notes, business expenses, etc). You should make sure to prioritize the debts of the deceased once you have gathered them all together. If there is a Will or trust, you may need to hire an attorney or investment advisor for assistance.

There are misconceptions about debts of deceased individuals: that spouses and children automatically endure the debts of their spouse or parent. You are only responsible for debts that you share with the deceased, such as co-signed loans, rental lease, etc.

What Usually Happens to Debts of Deceased

When someone passes away, his or her debts are paid for by any estates owned, including cash and real estate. The cash can be from a bank account, safe or insurance. Any other property, investments and possessions will be liquidated to pay for the debts as well. One or more executors or administrators handle the estate of the deceased. If there was a Will, it should name the executor(s). If there wasn’t a Will or if it didn’t name an executor, then an administrator is appointed. All of the debts have to be taken care of before anyone in the Will receives anything.

Each debt has a different way of being paid off. For instance, a mortgage usually takes the money received from life insurance, and if enough wasn’t received, then the property will have to be sold. Then if a property was being rented, the arrears have to be paid for by whomever was on the lease with the deceased. Council taxes and rates, and water rates have to be paid for by whomever is still living in the home. All joint debts have to be paid for by the survivor.

Steps to Take

Make sure to check all of the deceased’s debts to see whether you are tied to any of them. In some states, some assets are considered to be probate, which means that creditors are able to get a hold of them to pay off debts. Some states also automatically consider your home or assets to be jointly owned, which is referred to as a community property. These states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. You are able to receive free and independent advice from various organizations when dealing with the debts of a deceased loved one.

Dealing with debts of the deceased doesn’t have to be a complicated situation. Try to do whatever you can to prepare for the resolutions of your own debts, so that your loved ones won’t have to struggle with the mess left behind when you pass away. If you need quick financial assistance, you can consider getting a payday loan.