What Happens to Debt When you Die?

When someone passes away does their debt die with them? Not necessarily.

But first things first, in order to protect the credit of the deceased person from fraud, you will want to notify the following entities of the death:

• All known creditors of the deceased person. If you do not have that information, it would be helpful to request a copy of the credit report for a list of outstanding creditors.
• The Social Security Administration
• All three of the credit bureaus – Experian, Equifax, TransUnion. Contact information for the credit bureaus can be found at the following websites:

https://www.transunion.com

https://www.experian.com

https://help.equifax.com

Now back to the debts. In regards to joint debts, when one joint account holder is deceased, the other joint account holder is now liable for the total debt. In regards to other debts, ones that are solely of the deceased person, they will now pass, NOT to the heirs, but to the

ESTATE created at the person’s death. When a person dies an estate is created comprised of all of that person’s money and assets.

During the probate process, the Personal Representative, who is court appointed to oversee the estate, has the legal obligation to notify all known creditors of the probate. A Notice to Creditors will be published in a local paper and a copy is to be mailed to all known creditors. This Notice to Creditors states in part:

All creditors of the decedent and other persons having claims or demands against decedent’s estate on whom a copy of this notice is required to be served must file their claims with this court WITHIN THE LATER OF 3 MONTHS AFTER THE TIME OF THE FIRST PUBLICATION OF THIS NOTICE OR 30 DAYS AFTER THE DATE OF SERVICE OF A COPY OF THIS NOTICE ON THEM.

To possibly receive payment, a creditor must do more than just call you requesting payment or send you a bill, after receiving a copy of the Notice to Creditors, a creditor must file a claim with the court.

Does the filing of a claim guarantee payment from the Estate? That will be answered in a future blog.