What Happens When A Person Passes Away Owing A Debt?

If you’re reading this, there’s a chance that you or someone very close to you has recently lost a loved one. If the person who died owes money on anything—credit card bills, medical debts, an outstanding mortgage—their estate will work through probate court to pay off those debts. 

In most cases, a person’s debts do not disappear when they pass away. Those debts are owed by and paid from the estate of the deceased person.

While dealing with a deceased person’s debt may be a very sensitive matter for your family, you can seek assistance from experienced probate lawyers in Texas. They’re skilled at this kind of work and will guide you every step of the way during this difficult time.

Probate Process 

Creditors often have a specific window of time after a person dies and once the probate process begins to lodge claims for what the person owes. Through the probate process, the estate’s assets are dispersed and debts are settled. Property and assets under the person’s name are deemed part of the estate and can be used to repay the obligations. 

There are times, though, when family members will have to look for ways to pay:

  • If the person has a co-signer on a loan or line of credit, the co-signer will be liable for the debt after the other passes away.
  • If the person lives in one of the community property states, the spouse may be forced to pay their debts using property that they jointly held rather than property that was only in the deceased person’s name. Common law states include Arizona, California, Idaho, Louisiana, New Mexico, Nevada, Texas, Washington, and Wisconsin. 

What Happens With:

Mortgage Or Home Loan: You can sell the deceased person’s house and pay his/her remaining balance to settle the mortgage debt once and for all. 

Debt Owed To Hospitals And Medical Bills: The care provider or collection agency will have to decide how to go about getting the money back. If a person owes a lot of money, it may try to collect it from the estate.

Debts Owed To Government Agencies: If a deceased person leaves unpaid fines or tax payments that he/she was supposed to settle before death, they need to be paid to avoid legal problems.

Debt Owed To Banks: If a deceased person owes money in the form of loans from the bank, you may be required to pay it off if the deceased left behind a loan agreement between him and the bank.

Hire The Best Probate Lawyer In Round Rock, TX

When a relative passes away owing a debt, it can create stress and concern for those left behind during this hard time. It’s important to know what legal steps need to be taken, so you can feel more secure regarding these decisions.

The best choice for seeking options regarding deceased debtors is hiring an experienced probate lawyer. Elissa Henry is a highly skilled lawyer specializing in wills, estate planning, and probate in Houston, TX. When working with our firm, you can rest assured we’ll come up with an action plan that’ll prioritize your interests and give you the peace of mind you need to focus on other things.