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What Happens to Debt After Death?

What happens to debt after death? Who is responsible? Find out all you need to know from the probate lawyers at Cherewka Law.

When a loved one passes so many things can happen at once. It falls to family or close friends to communicate the news, arrange a funeral, cover hospital bills, etc. Unfortunately, none of these tasks pause as we work our way through the process of grieving.

Someone will also be expected to peruse the loved one’s possessions, including their Will and Estate Plan, and general finances. During this process, it is common for remaining loved ones to uncover debts accumulated by the deceased. Discovering unpaid debt can be alarming, especially if the number is high. Panic sets in and questions inevitably come up. Will those debts be forgiven? More importantly, however, is who is responsible for these unpaid debts?

Here’s a quick guide for you on what happens to debt after death created by the probate lawyers of Cherewka Law.

What Debts are Forgiven at Death?

Unfortunately, a person’s debt cannot be forgiven after their passing. According to the Consumer Financial Protection Bureau, a person’s estate is generally responsible for paying any unpaid debts.

A personal representative handles the finances for an estate. If the decedent had a Will, then the person named as the Executor of the Estate would be responsible for paying all incurred debt, including medical bills from the decedent’s assets. The executor is not personally responsible for the payment of the decedent’s debt.

If there is no will, than an administrator has to be appointed to facilitate the estate administration process. If an administrator is appointed for the Estate, than the Administrator of the Estate is responsible for paying all incurred debt, including medical bills from the decedent’s assets. Similar to the Executor, the Administrator is not personally responsible for the payment of the decedent’s debt.

Who is Responsible for Debt After Death?

If monies from the estate cannot cover the accumulated debt of the deceased, financial obligation can be passed down in limited cases. These could include:

  • If there were joint owners or account holders
  • If there were any co-signers of the loan

What Happens if You are Deemed Responsible for Your Loved One’s Debt?

If you’ve been told you are responsible for a deceased loved one’s debt, it’s important to first consult a probate or estate lawyer before making any payments. Some things are more absolute than others. If you are a loan co-signer or a joint account holder, it is likely that you will be the responsible party. However, getting legal advice from an experienced estate attorney ensures that you avoid specific situations that can hurt your financial standing.

Debt After Death: The Bottom Line

To spare your loved ones from unnecessary grief and stress, make sure to keep a list of all your outstanding obligations. If your finances are in an organized order when you pass, it will make it easier on your personal representative to keep track of everything.

If you’re on the hunt for the best probate lawyer in Wormleysburg, PA, Cherewka Law has you covered. We provide our clients in Harrisburg, Hershey and throughout the West Shore area with personalized estate planning and estate administration services.

Book a consultation today.

Jun 21, 2021 | Articles

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