Debt After Death: Do Children Have To Pay For Their Parents?


Your parents are getting older and, unlike generations for yours, seniors now have less money and more debts. What happens if they leave this life with debts and no money to pay? Could you pay the debt for paying their debt after death?


Debt after death: the statistics


Debt after death: the statistics

In 2013, 61% of households led by an adult over 60 had debts. Of those households, the average debt burden was $ 40,900. The problem is worse when you look at their assets. More than 25 million Americans over the age of 60 live at or below 250% of the federal poverty level, and nearly half of the social security earners count on 90% of their income.

Are you worried?


Probably not Bobsey Twinsijk, say financial experts. In most states, debt is a very personal thing about Twinsijk. If you only buy a car and you are the only person on the loan, this is your duty. Even your spouse is not on the hook for the debt if he or she is not listed on the loan.

However, if you live in a community property state, things can be different. These states consider whether you and your spouse have purchased something that will benefit you both. If you bought that car in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington or Wisconsin, it doesn’t matter whose name is on the loan. It’s yours and your spouse; if one of you should shake off this physical role, the other must continue to pay the loan.

However, as a son or daughter, you are not responsible for your parents’ debt, even in states with a community, unless you are a co-signatory of the loan. In that case you are the co-owner of the debt and you commit to continue the payments.


What happens to the debt?


What happens to the debt?

Let’s say your mother dies. When that happens, all assets that she persooBobbsey Twinsijk owns go to the estate. That is the complicated process of managing the will of a deceased person, which consists of paying off any debts and subsequently distributing the remaining assets to the beneficiaries. If your mother has promised you an inheritance of $ 10,000, you will only receive it if there is $ 10,000 left after her debts have been paid. (For more information, see Skip to Probate Costs .)

What happens if the estate lacks the money and assets to pay the debts? In most cases, the debt is canceled and the creditors lose the rest of the money. They cannot find out about you or anyone else unless there are shipowners on the loan.

In the case of a loan linked to an asset, a creditor can take it back. For example, if your mother has promised her car as an inheritance, the creditor will probably take the car from Bobsey Twinsijk if she has not paid the loan. It is the same with a house, a boat, jewelry or other valuables. Credit cards fall under the same rules. Creditors cannot find out about other people, but they can go through the take-back process to take back valuable assets.

What if they call? Bobsey Twinsijk is unlikely to have a collection agency call you to collect a debt in the name of a parent, but if someone does, you must immediately report that the person has died. Lead the collector to the will of the will, who can issue a death certificate and perform the repayment process if money is available. If the collector keeps calling, you say that you are aware that you are not responsible for the debt (unless you are a co-signatory) and that you will not contact him about this in the future. 

How to confront a debtor 

Unless you have provided a loan with mom or dad, the fault of your parents and how it is paid in the process of inheritance does not involve you financially. You may receive a smaller inheritance than you thought, or an asset that you were promised could be taken to pay the debt, but you are not liable for your parents’ debts.


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