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Debt After Death - Who's Left Paying

I recently read an article about a woman who is being hounded by the creditors of her deceased mother. In spite of repeated telling the creditor that her mother is deceased and sending them a copy of the death certificate, the creditors continue to contact her making demands for payment. Their requests vary from, “wouldn’t your mother want you to pay this bill for her?” to, “If you don’t pay this bill we are going to report you to the credit bureaus.”

So does she have a responsibility to pay off the debt? Probably not. There are very specific situations in which you would be responsible for the debt of a spouse or a family member. Those include being a joint account holder, being a co-signer, or if you live in a community property state and the debt belonged to your spouse.

According to Sally Hurme, senior project manager of health and supportive services at AARP, “There is an orderly court process, called probate, for the collection of a deceased person’s debts and it doesn’t include harassing calls from debt collection agencies.”

Probate, is the process by which an executor (if the deceased had a will) or a court appointed administrator (if there was not a will) manages and distributes the deceased person’s estate (what they left behind). During the normal probate process public notices are issued notifying creditors, who may be owed money, by the person who has died, to come forward and state what is owed. If there is money in the decedent’s estate, creditors may be paid part of that money. The process typically takes two-to-four months. At the end, if there is not enough money to cover the all of the debt, anything remaining will be eliminated as long it was not a joint account or for a debt like a home or car loan.

If the person’s financial matters do not go through probate, you can always notify the creditors that the account holder is now deceased. Send a copy of the death certificate and a notice that you are not responsible for that person’s debts. Make sure you keep the original death certificate and a copy of the letter you send.

Liz Weston of MSN Money also offers this advice, “If you’re not the administrator (of the estate) and don’t want to be bothered again, follow up with a “cease contact” letter — sent certified mail, return receipt requested — to the collector. Any subsequent calls could be violations of fair debt collection laws, and you might be able to sue.”

It is never easy when someone you love passes away. Managing debt and death can be complicated and it may be worthwhile to contact an attorney. If you do, ask if they offer a free consultation and come prepared with the questions you need answers to when it comes to paying the debts of someone who is deceased. If the debts do belong to you as well, contact a certified credit counselor who may be able to help you develop a plan for paying off debt in an easier, more affordable manner.

Published Jul 20, 2011.