Who Pays My Debt After I’m Gone?

“Attorney Quinn, I have a question: My mother passed leaving a couple of credit card balances along with a car loan. I have been making payments toward each bill out of my own money. Should I continue making those payments or should I just pay them all off?”

This scenario highlights a common consideration of individuals with whom I have communicated over the years, and it raises a reasonable question. Who is responsible for the debt of decedents? Is it the spouse? The children? The answer really is pretty simple. Debt is always (and only) the responsibility of the person that agrees to pay it!

Consider this – when you applied for your credit card, did your daughter or father agree to pay it as well? Probably not! Hopefully not!! Only in situations where a person co-signs for your debt can the creditor require that person to pay off the debt. Absent co-signer arrangements, you are the only person that can be required to pay your debt!

This same principle applies in situations involving the death of the debtor as well. It is unfortunate that some creditors will call and harass individuals following the passing of loved ones. Creditors especially like to prey on elderly individuals following the passing of their spouse. Generally speaking, no one is responsible for using their personal resources to pay the debt of a decedent. Creditors can only collect from the debtor, or the debtor’s estate, once the debtor dies.

If a creditor of a deceased individual calls you demanding payment and threatening garnishment, etc., simply tell them “No thank you!”, and hang up the phone.

At this point, if the debt is legitimate, the creditor maintains the option of involving the probate court, by filing a claim against the estate of the decedent. If the decedent has no personal or trust estate (died without any assets of value in his/her name, or in the name of a trust), the creditor will likely have no valid collection options. In any case, relatives of the decedent have no obligation to satisfy those debts personally. Please note, however, that creditors are entitled to payment where a debtor decedent maintained ownership interests in certain assets at the time of his/her death, if the debt claim is presented within the applicable state-directed time frame.

Let’s imagine a situation where your mother passed leaving a house (no debt), a car (no debt) and a bank account with a value of $35,000. Assuming you had no ownership interest in any of these assets, you would need to open a probate proceeding in the county where your mother resided in order to access these assets. Prior to gaining ultimate access to these assets, you are required to notify all known creditors directly that a probate proceeding has been initiated. You are also required to publish notice, in a local newspaper, regarding probate proceeding – thus notifying any “unknown” creditors of the proceeding, inviting them to submit their claims. This gives creditors a final opportunity to make a legitimate claim against the estate (the appropriate debtor) for monies owed.

In Michigan, the creditor then has four months to make its claim. If the creditor makes its claim within four months of the “notices to creditors”, and the claim is proven to be legitimate, the creditor must be paid out of the estate assets, prior to the disbursement of any estate assets to heirs or beneficiaries. Any creditor that fails to make its claim within the allotted time permanently loses its right to be paid.

Simply put, creditors of decedents are limited to seeking payment of legitimate debt from the estate/trust of the decedent, unless another individual has agreed, or agrees to make such payment.

Do not be misled. Don’t let your loved-ones be misled. Know your rights!

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