How To Settle a Deceased Person's Debts

Are you receiving bill after bill following the death of your loved one? If so, it’s important that you understand the rules of posthumous bills as well as your rights when it comes to paying your deceased relative’s debts.

Are you responsible for your dead loved one’s debt?
According to the law, family members are not required to pay the debt of their deceased relatives. Even if there isn’t enough money within the estate to pay for the outstanding debt, it is still not the responsibility of the family members. Instead, debt like this tends to go unpaid.

However, there are some exceptions that could make you personally responsible for the debt:

• If you cosigned on a financial obligation, like a car loan.
• If you are the spouse of the deceased party. 
• If you live in a community property state.
• If you reside in a state that requires you to pay the health care expenses of your deceased spouse.
• If you are legally responsible for resolving the estate but you didn’t adhere to certain state probate laws.

Start from the beginning
Are you the executor? This is the person who is named in the will and is in charge of carrying out the instructions within the will. If you are the executor, then you are the party responsible for settling the debts of the deceased party.

If there is no will to reference, then the court can appoint someone to settle the affairs of the estate. In some states, this form of power can be granted to an individual without the court having to appoint them. However, it’s a state-by-state matter, so look into your state’s laws to understand how this process will unfold in your area.

When it comes to understanding and dispersing inheritance among beneficiaries, the debts must be prioritized. Before dividing funds up as inheritance, make sure there are plenty of estate assets to cover the total amount of debt that the deceased party left behind. 

Keep in mind that not all assets that someone owned are up for grabs once that person passes away. Instead, there are laws in place that dictate which assets are exempt and which are non-exempt.

Protect yourself in the process
You might be wondering whether a debt collector can talk to a relative about the loved one’s debt. Ultimately, the law protects family members from debt collectors — who are often abusive, unfair, and deceptive. Not only might they try to call you all day and all night in an attempt to take money from you, but they also manipulate people in the process of trying to do so.

According to the Fair Debt Collections Act, debt collectors are allowed to contact the deceased’s spouse, parents, guardian, executor, and administrator. So, debt collectors can legally reach out to anyone who might have the power to pay debts associated with the dead person’s estate. That said, debt collectors are not permitted to discuss the debts of a deceased person with people other than those listed above.

How to respond if a debt collector contacts you
If someone claiming to be a debt collector reaches out to you — whether you’re a relative of the dead person or somehow connected to the deceased individual in other ways — you can provide the debt collector with the name of who is responsible for managing the deceased party’s debt. You can give the debt collector information like the name, address, and phone number pertaining to the deceased person’s spouse, executor, or estate administrator.

That way, communication will be directed to the appropriate party. However, no matter what you do, refrain from discussing the details of the debt with the debt collection agency or representative. 
Now, here’s the big question: If you are the person with the power to pay the deceased’s debt, can you stop a debt collector from contacting you in an attempt to get the debt paid?

The answer? Yes, laws are in place stating that you can prevent a collection agency from contacting you regarding your dead loved one’s debt. You can start by sending a letter to the debt collector.

Don’t try to call them; a phone call will not suffice. You’ll want to have a paper trail of your communications. Let the debt collector know that you do not consent to being contacted again. Make a copy of the letter for your records, and then send the original letter via certified mail return receipt. That way, you’ll be notified when the collector receives your letter.
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Remember that states have their own debt collection laws in place. Contact your state attorney general’s office to better understand your rights under the laws in your state. If the estate or your deceased loved one’s circumstances are particularly complex, work closely with qualified professionals.

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