We recently shared some basics about what happens to debt when a loved one dies. It isn’t just money and assets that some leave behind. Debt is commonplace among households and individuals. When death occurs, what happens to debt? Are you responsible to pay it off?
As we began discussing last week, your responsibility regarding debt depends on the debt and its specifics. A basic question is this: Do you share ownership of that debt? If you shared, were a co-signer of a credit card with the decedent, then you will owe its remaining balance.
Other types of debt exist beyond credit card debt. A common type of debt left behind is mortgage debt.
Are you a co-owner of the mortgage loan on the home in question? If your spouse dies and you owned a home together, it is probable that you both took out the home loan together. Therefore, you will still owe mortgage payments. If your parent dies, however, you probably will not owe the balance of the loan.
Often, loved ones who pass leave behind some money via a life insurance policy. Know that creditors should not have access to that policy as means to recoup their balances. That money is generally protected. Beneficiaries might choose to use some of the money to repay debts, but they are not required to do so if they do not technically own the debt.
Creditors can be aggressive, even during a trying time for those who are mourning the loss of a family member. Surviving family should not make any quick decisions about debt payment or the estate in general without first getting the support of a trusted probate attorney.