There are many things that people have to do when they lose a loved one. One of these is handling that person’s final affairs. Some individuals may not realize what that entails.
When a person creates an estate plan, they name an administrator who takes care of many aspects of those final affairs. This includes paying the estate’s debts, finding the estate’s assets and distributing those assets to the appropriate beneficiaries.
How do debts get paid after someone dies?
The way that the debts get paid depends on a few factors. If the debt is jointly held, the other account holder is liable for the balance. The same is true if there’s a co-signer on the account.
If there’s no joint account holder or co-signer, the creditor has to turn to the decedent’s estate. The debt might be paid if there’s enough available in the estate to cover it. All debts have to be paid in a specific order, so there’s a chance that some debts will be paid while others go unpaid. Once an estate doesn’t have any assets remaining, it’s insolvent and the remaining creditors would have to write off the remaining balances.
There’s a chance that some unscrupulous debt collectors will try to collect from the loved ones of the decedent, but those loved ones aren’t responsible for the debts unless they’re co-signers or joint account holders. Instead of giving the debt collector financial information, they should simply direct them to the estate administrator to make a claim.