Debt After Death

When you pass away, your debt does not die along with you. With the exception of a few cases, most debt is not forgiven.

Who Pays for the Debt?

The debt is often paid off by family members. However, this doesn’t necessarily mean they have to pay money out of their pockets. Instead, the debt is generally deducted from their inheritance. Creditors may seek payments from funds provided by the estate money or property.

States are starting to place limitations on the amount of funds creditors can obtain from an estate. However, chances are the creditors will be able to receive the money legally owed to them. The only way debt can be forgiven is if there are no assets or property left. Creditors may then go after family members to receive the remaining debts.

This is the case when the deceased has a joint bank account or joint debt with a living spouse. The surviving spouse is then legally responsible for the debt, even though he or she may have not created it. This can be very difficult financially.

Inform Your Family

If you are in debt, it is important that you speak to your family members about the debt amount. This will help to prepare them in case of your unexpected death, so that there will be no financial surprises to deal with during an already difficult period.

Contact Us

If you need assistance handling legal issues after a loved one’s passing, contact the Austin probate lawyers of Slater, Kennon & Pugh LLP by calling 512-338-1100 today.