Anonymous
Anonymous asked in Business & FinanceOther - Business & Finance · 1 month ago

What happens to a person’s debts when they die?

I am the creditor with someone who passed a couple months ago. I have the debt agreement signed by them and we were in a court case shortly before his death as he wasn’t willing to pay his debt. Will the person’s debts need to be paid before their assets are transferred to their family? What if the inheritors do not pay the debt? Can I still claim my debt from them even though the original debt agreement was between myself and the deceased, not the family?

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  • 1 month ago

    When someone dies and they do not leave a will, the entire estate--all the assets such as a home, savings accounts, money  left in the checking account and any property--are turned over to the probate court which decides FIRST what debts there are and if there is enough money to cover them, and SECOND what is left to go to the survivors. Debts are taken out first.  You have to file a claim with the probate court against the estate. Bring whatever proof of this debt and the amount that was paid on it to the court and tell them about it. 

    You may have to wait a very long time to get anything, if you do get anything. Especially if the deceased owned a home--it will have to be sold to cover the remaining part of the mortgage, and any other debts. The court may allow the family to sell the home, but they are obligated to pay off any remaining debts out of the profit. Probate can take a year or two--sometimes longer; it depends on how complex the deceased's finances were. 

    If the person has a will, it's much shorter. The home will go to whomever the deceased designates, and debts will become the responsibility of the survivors. Not all debt is recoverable after death. It depends on the laws in your state. For instance, a landlord cannot force a family to pay off any remaining months left on the lease when a person dies. But car loans--home loans--and most credit cards are claims the family will have to deal with. Cars and homes can be sold or repossessed, but credit debt is not salable. And sometimes a person has purchased a sort of policy that allows the card debt to be forgiven after death. 

    There is a hierarchy about who gets to put in a claim first--and who gets paid first. I have no idea how far down the list your debt would be or if it is allowable. And there may be a time limit on how long you have to file with the court as a creditor. You need to absolutely contact the courts and find out. 

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  • Anonymous
    1 month ago

    See about putting a lien on his house if he owned one.

    Go to the probate court and ask about it in his town or county.

    It will take time for the family to get what is left. My father died in 2017 and we still haven't distributed the stock he owned.

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  • Anonymous
    1 month ago

    It has something to do with probate and his estate. Nobody instantly automatically pays you.

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  • 1 month ago

    You need to properly file a claim against the person's "estate" (assets) quickly.  Since it's already been "a couple months" and you haven't started, I'm not confident of your ability to get it done correctly in time yourself, so you should hire a lawyer immediately to do it for you, unless it's already too late.

    If a claim is made in time, and there are enough assets to pay all the debts, then the debts should be paid with some of the assets, before the rest of the assets are transferred to the family.  If there are not enough assets to pay all the debts, then all the assets should be used to pay as much debt as possible, and no assets should be transferred to the family, but not all the debts would be paid.

    If you don't make a claim quickly enough, and all the assets have already been transferred to the family, then it may be too late.  Again, check with a lawyer immediately, because the longer you wait, the less likely you are to get anything.

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  • Anonymous
    1 month ago

    You file a claim with the Probate Judge in the State where the deceased lived.

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  • Erik
    Lv 7
    1 month ago

    Talk to a lawyer

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  • Anonymous
    1 month ago

    In MY State all debts must be paid prior to distributing assets.

    WHERE is important.  Was there a Will?  Is there a requirement for probate - thus, a Court filing?  Does a letter need to be sent to next of kin?

    AGAIN - WHERE?

    No, you cannot inherit/get paid by next of kin.  You can only be paid though the debtor's assets except in very specific circumstances and, again, WHERE?

    • Jo1 month agoReport

      New Zealand 

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  • 1 month ago

    You have to at least say the country.  

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