Debt and the Deceased

 Am I stuck with these bills?

Debt and the Deceased | Who Pays the Debt of the Departed?

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The Federal Trade Commission (FTC) doesn’t require the relatives of someone that is deceased to pay for their financial obligations from their own assets. For example, if your brother dies his debt collectors can’t pursue you to pay them due to the fact that you are related.

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Should any such collector be bothersome, even if you are responsible for the debt, you can report them. If they are threatening you, using deceptive practices, being abusive in their language, or other concerns you can report them as you are protected under the Debt Collection Practices Act

When someone dies, their estate is looked at. If they own property or have money in savings it will go to pay off their debts. If they have a burial insurance policy or a life insurance policy, that money will go to pay for the funeral first and, if there is any surplus, it should be applied to pay down debt. However, there are often times when there isn’t any funeral insurance or savings. There could be more debt than money accessible from the deceased to pay for all of their debt.

Recent visitors to this page have often seen one of the following also:
Consumer Law: Funeral Rule
Are you eligible for inclusion in a national Cemetery?
Burial or Cremation: Pros and Cons

If you are a co-signer or joint applicant on a loan then you can be held liable for the entire balance that remains. However, you may be able to get the amount of payment each month lowered by calling that lender and explaining the circumstances. This is especially true if the deceased was a significant financial contributor to paying that debt.

If you aren’t sure if you have to pay for the debts of someone that has died, you should seek legal counsel. The laws can be hard to decipher on your own and you don’t want to get into trouble for not paying what you should. On the other side of that coin, you don’t want to feel financial pressures mounting because you are paying for something that you, by law, don’t have to.

The estate laws vary by state too, and certainly by country, so make sure you get accurate information from an expert that can be trusted. Here is a resource for accessing information pertinent to different states (in the U.S.).  Click the link: Debt and the Deceased.

Do you have any thoughts on or experience with this? If so, why not share them by commenting below.

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