(Closed) Debt and death

posted 6 years ago in Legal
Post # 3
Member
4352 posts
Honey bee
  • Wedding: August 2013

If they didn’t have a wife or kids I assume the debt would fall to other relatives (parents, siblings, grandparents ect.)

Post # 6
Member
10603 posts
Sugar Beekeeper
  • Wedding: January 2011

Anything from their estate goes to the debt.  If nobody cosigned, any remaining debt disappears.

Post # 7
Member
839 posts
Busy bee
  • Wedding: September 2014

In most states, debt is not inherited, so the debt will NOT pass on to the heirs. The debt will disappear if the decedent doesn’t have any assets whatsoever. If the decedent DOES have assets, those assets will go toward the debt before they go to whoever woulld have inherited them.

Here’s a very crude example: if your father dies with $20,000 in his estate and you are the heir, but he is $30,000 in debt, that $20K he left you will go toward that debt, BUT you will not be responsible for paying off the remaining $10K of the debt.

General rule: debt is not inherited! BUT your inheritance can be taken to pay for a debt. Hope that makes sense!

Post # 8
Member
3885 posts
Honey bee
  • Wedding: September 2011

It’s up to the executor of the estate to decide with the creditors and the courts who gets paid and who doesn’t. If there’s no will, the court designates an executor. Some possessions like your car, tv, furniture might get sold by the executor and the proceeds given to the creditor. If someone’s possessions don’t generate enough money (or they don’t have the type of possessions that can be sold for much money, or if they don’t have even anything other than clothes), then the creditors write the debt off as a loss. Debts are paid before any assets ate distributed. Writing off losses is a cost of doing business for these companies, and is a risk they calculate when granting credit lines and determining interest rates.

if the deceased is over 18, then the debt may be carried across to their spouse (maybe common law spouse or domestic partner in some states) but never to a parent, sibling, or adult child except in the case of a co-signer, joint account holder, or other person with that legal obligation. A cosigned or joint debt will pretty much always carry over to the co signer but the types of debt that transfer to the spouse/domestic partner will vary with your jurisdiction.

Post # 11
Member
839 posts
Busy bee
  • Wedding: September 2014

@ladeeeda:  Keep in mind, my example is incredibly crude and it is much more complicated than that procedurally. But yes, the general idea is correct. How it will all work depends on whether they are secured creditors, how many creditors there are, what the executor of the estate decides to do, etc. But the general idea is that debt is not inherited, it can only affect your inheritance.

Post # 12
Member
2854 posts
Sugar bee
  • Wedding: May 2013

@asscherlover:  No, it falls to the Estate (if there is one) not people’s relatives.

Post # 13
Member
424 posts
Helper bee
  • Wedding: July 2012 - Muckenthaler Cultural Center

You would only inherit the debt if your name was attached to it. So if the person who passed had a $15,000 credit card debt and your name was also on that credit card it would be your debt now. If it was only under their name it would be fogiven. 

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