What Happens to My Debt in Pennsylvania After I Die?

When you pass away in the state of Pennsylvania, your estate is supposed to pay for all of the debts you left behind. Your estate is a combination of probate assets that have value. Most probate assets are real property items such as a home or a car, but a bank account that does not have a joint owner, the contents of a safety deposit box and even valuable personal items, such as a set of rare collectibles, can all be used as estate assets to pay off your debts as well.

Whether you leave behind a legal will or not, the state of Pennsylvania requires that a probate court case be opened. If you leave behind a will, your surviving relatives can simply take that documentation, along with any information related to your assets and debts, to an attorney who will help them file the appropriate probate paperwork. The probate process is specifically set up to ensure that your surviving family members cannot inherit your debt and that all appropriate property is put into each heir's name legally, if applicable.

Upon the opening of the probate case for your estate, an executor or personal administrator will begin sending death notifications to your creditors. Each creditor must list its claim against your estate in order to receive payment as the estate is closed.

Your estate executor must use assets from your estate to pay estimated inheritance taxes, funeral expenses, legal and court costs and any outstanding debts you leave behind. If needed, the executor may sell some of your assets to raise enough funds to cover all of the debts. Once all debts and taxes are paid from the assets in your estate, if there are remaining assets, they will be distributed to your heirs and beneficiaries according to the terms of your will.

If you do not own enough real or personal property assets -- or the things you own do not have enough value to cover all of your debts -- the probate court will declare your estate insolvent. When an estate's assets are not worth enough to cover their outstanding debts, an order of priority is established for debt payments. Court and funeral costs, a family allowance, recent medical bills and a grave marker all take priority over miscellaneous debts such as credit card debts. Once all priority debts are paid, any remaining estate assets are divided equally amongst remaining creditors and claims against the estate.

The only time a surviving relative, spouse or other third party might be liable for your debts after you die is if your account executor makes a mistake when handling the estate, someone holds a joint debt account with you or you received assistance payments from the state.