How is Unsecured Debt handle at time of death?

Question

I strongly question what I’ve heard from a family member. It sounds as though this person- whose cancer has just returned with a vengeance- has not been paying their maxed credit card for months. Those bills are supposedly consolidated and “unsecured”, she says so that payments will be waived when she dies.   It doesn’t feel legit to me.

Answer 1

You really need to discuss this with a lawyer.

Answer 2

Debts will be paid by the estate, which may need to sell off the person's house, etc. in order to pay them. 

If the person had more debt than assets, the secured debts will be paid first, and unsecured debts will get only what is left over. Heirs will get nothing. 

You can't inherit a debt. But if you supposedly inherit anything from this person, you may have to give it back.

Answer 3

comes out of the person's estate if they have one, befor  anything is distributed to heirs,  if the person has no assets, th  dbt  just goes way

Answer 4

easy they sell all the assets , like fridge , tv , radio and there old clothes then if theres still money owing the have to write it of , and you  get nothing except the funeral cost ..

Answer 5

Most of the time it IS charged off--unless the estate has enough to pay the debts. An attempt will be made to collect it--don't doubt that--but if there isn't any money to pay the debt from life insurance/savings or liquid assets, (not the house or car) then usually the card company doesn't bother with prosecuting the heirs for the payment. 

Any unpaid balance on a car loan will be paid by repossession of the car. The mortgage will have to be paid by the heirs if they inherit the house. Inherit the house, inherit the debts that go with it, such as home equity loans, mortgages, (including reverse mortgages) and liens. All other debts get paid BEFORE the heirs are paid and the final expenses are paid if there is anything left. All debt is a liability against the estate. 

You need to tell that person who is dying that if they continue non-payment and the accounts go into collections or they take legal action BEFORE she dies, that those actions will be continued against the heirs to the estate. You might ask her if that's how she wants to be remembered--as a deadbeat credit-junkie, or as a person who tried to do the right thing. She can't get away with non-payment forever, and the day of reckoning may be sooner than she thinks. 

Answer 6

First and most important, family members are not responsible for any debts of a deceased person unless they are a co-owner of the  account or have co-signed. With that said, when an individual dies, his creditors file a claim against the estate and, should he assets, they will be used to repay the debts. Should they be insufficient, the creditor will have to write off the account as uncollectable.

Answer 7

The bank will sue the estate for the amount of the unpaid credit card debts, which don't forget are accruing interest.  This will reduce the size of the estate to whomever is going to inherit it.

Answer 8

Debts are not inherited, but NO ONE can legally inherit ANYTHING from the deceased until ALL debts are paid in full. If the deceased doesn't own enough to pay all the debts, the excess debt is not paid. While creditors may not chase down all personal property, they have the legal right to literally take the shirt of the deceased person's back to pay toward their debts.

fcas80: NO, creditors don't need to sue the estate. They only need to file a claim against the estate.

Answer 9

When as estate is probated all debts are paid before any assets are distributed. If the person has more debts than assets, the debtors are essentially out of luck. If the person has assets like a home, the home has to be sold to pay off the debts, it cannot be willed to someone else. So if your relative thinks they will be able to leave things to family members and avoid the credit card debt, that won’t happen. 

Answer 10

It doesn't mean they won't go after your assets.