Do I Have to Pay Off the Debts of Deceased Parents?
When your parents have debts when they die, bill collectors may start calling you to try to get you to pay what they owed. While the collection agents may be very persuasive, you typically will not have to pay the debts that are left behind by your parents. In this situation, it is important to know your rights so that you are not pressured into paying what you do not owe.
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Joint Debt
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If you were a joint account holder with your parent for a particular debt, then you could be held responsible. For example, if you and your parent had a credit card together, the debt would then automatically transferred to you when your parent dies. If you had an auto loan or a mortgage jointly with one of your parents, these debts will then pass to you as well. If you are not on the account, you should not have to worry about taking responsibility for the debt.
Probate
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When your father dies, some of his debts may be paid through the probate process. During probate, the executor of the estate is in charge of collecting assets and paying debts. Any assets that the estate has will be used to pay for outstanding debts before they are passed on to beneficiaries. The executor will pay the claims in the order set forth by the probate court. If the estate runs out of money, the rest of the debts will be forgiven.
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Secured Debts
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When your parent dies with secured debt, the assets that acted as collateral may be taken back by the lender. For example, if your parent had a mortgage, the house eventually may be foreclosed on by the lender. You also may have the option of refinancing the existing mortgage if you want to take over the house. Vehicles with auto loans can be paid off with the estate assets or repossessed by the auto lender.
Considerations
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If you are being pressured into making payments by a collection agency, do not simply give in and agree to a payment plan. If the debt is unsecured, as is the case with most credit cards, the debt can simply be written off by the creditor. Stand your ground and inform the collection agent that you do not owe the money and the estate does not have any assets left to pay for the debt.
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