– Most Americans have some form of debt, accounting for an estimated $14 trillion in debt collectively.
– While most debts are paid by the deceased person’s estate, in some cases, the surviving spouse may be responsible for paying off the deceased spouse’s debts.
– People of all ages, including those nearing retirement or in the Silent Generation (age 75 and over), often still have significant debt.
– Debt is not automatically forgiven when a person dies, and the handling of debt after death is typically done through the probate process. – Probate is the legal process for distributing a person’s property after death, and it involves paying off debts and distributing assets according to the person’s will or to their legal heirs.
– Certain assets, like life insurance policies and jointly owned property, are not subject to probate.
– Each state has different rules for prioritizing the order in which debts must be paid during probate.
– An estate that lacks the money to pay off its liabilities is known as an insolvent estate, and in certain situations, a spouse may be liable for their deceased spouse’s debts, such as if they cosigned for a loan or are a joint account holder on a credit card. 1. Living in a community property state means that a couple’s assets and debts are considered jointly owned by both spouses.
2. If the estate is insolvent and cannot cover its debts, the surviving spouse may be personally liable for paying the debts, even if they were exclusively in the deceased spouse’s name.
3. Exceptions to the shared-debt rules in community property states include debts incurred before marriage, debts incurred during legal separation, and property received as a gift or inheritance.
4. Debt collectors may contact the surviving spouse to collect the deceased spouse’s debts, but the surviving spouse may not be legally obligated to pay them.
5. Ignoring a legal filing from debt collectors is not recommended, and the surviving spouse may need to hire an attorney to prove that they are not liable for their deceased spouse’s debts. 1. Debt collectors have the right to contact a deceased person’s spouse to find out who is authorized to pay the estate’s debts.
2. Debt collectors cannot represent that a surviving spouse is personally responsible for paying the debt unless they are legally obligated to do so.
3. Surviving spouses have the right to tell debt collectors to stop contacting them in writing, and the collectors must then end communications.
4. Any debt that a surviving spouse does not personally owe should not affect their credit score, but debt collectors could improperly report a deceased spouse’s debts under the surviving spouse’s name.
5. If erroneous debt information is reported to a credit reporting agency, the surviving spouse can file a dispute to get the information removed from their credit report.
6. It is important for surviving spouses to understand estate administration laws, unpaid bills, and creditors when dealing with a deceased spouse’s debts.
7. Surviving spouses unsure of their rights and obligations regarding a deceased spouse’s debts can seek advice from an estate administration attorney.
https://www.henlaw.com/news-insights/what-happens-to-my-spouses-debts-at-their-death/
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