You may have read multiple news stories about collection agents calling people whose loved ones have died, attempting to hold them responsible for the deceased’s debts.
Fortunately, there are only a handful of cases where a person directly inherits debts.
A Deceased Person’s Debts Come Out of the Estate
While it may feel like you’re still paying for the debt when it comes out of your inheritance, it’s at least comforting to know that debt collectors can’t come after you or your own money. In addition, creditors have to file a claim against the estate and must do so within a 7-month period from the date the executor is appointed.
Sometimes, debts wipe out the estate. The executor has to pay the debts first before distributing any assets. But the good news is that if there is leftover debt after all the assets are used up, the rest of the debt simply goes away, even if it’s a government debt like a tax or a student loan debt.
Which debts don’t go away?
If you co-signed a loan with the deceased, then you become solely responsible for the loan. If you and your spouse took out loans together, you may still be responsible for your marital debt.
In addition, if you inherit a loan with a mortgage, you can’t take the home without either paying all that debt back right away or taking over the mortgage and paying for it.
It is very important that you stop using the deceased’s credit cards after their death. Sometimes, authorized users don’t realize they cannot use the card once the cardholder dies. Authorized users who knowingly use the credit card after the cardholder dies commit credit card fraud.
Protecting Your Loved Ones Through Bankruptcy
If you are an older American who knows that your estate may be saddled with many debts after you die, declaring bankruptcy could be an important step. We can protect some of your assets with bankruptcy exemptions and use the bankruptcy process to wipe out all or most of your other debts, ensuring there will be something left over for your loved ones when you’re gone.
More importantly, bankruptcy could give you the peace of mind you’ll need to live out your final years in peace. Many more older Americans are choosing bankruptcy for just this reason.
Get Help Today
Life is hard enough without paying someone else’s debts. Don’t let creditors bully you into doing anything you don’t have to do.
If you’re facing financial issues, call our office to schedule a free consultation. Bankruptcy might be your best way out.
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