Tax Insights

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Dealing with a deceased relative’s debt

If a loved one dies, are you responsible for his or her unpaid debts?

The FTC Consumer information website includes helpful information about dealing with the debts of a deceased relative. While FTC’s information is great – here’s my best advice:

Check with an Attorney! An attorney can help you navigate the process and deal with creditors.

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That said, here’s a couple of things to know about the debt of a deceased person via FTC website .

  • A debt doesn’t go away when a person dies. The deceased person’s estate now owes it. If the estate lacks enough money or assets to pay the debt, the debt may go unpaid. There are situations where creditors can look to others to pay the debt, as Co-signers or spouses may continue to be on the hook. The FTC has other possible responsible persons listed here.
  • Debt collectors may only talk with certain people about a deceased person’s debt. Collectors generally can discuss the debt with the deceased person’s spouse, parent (if deceased was a minor), guardian, executor or personal representative, or any other person authorized to pay debts from the assets of the estate (like a Trustee).

Debt collectors can contact relatives to ask for contact information to reach the right person, but they can only call each person once to ask for this information.

  • Debt Collectors may not bend the truth to make you pay! They cannot lie or imply that you or any other family member is legally liable on the debt just because the estate has no assets to pay.
  • You have rights. If you don’t believe you owe some or all of the debt, send the collector a letter disputing it. Be specific as possible but give as little personal information as possible. When you get a validation notice (which says how much you owe, to whom, and what to do if you don’t think you owe the debt) you have 30 days to send a dispute letter. See additional info on this process on the FTC website. Or contact an attorney to help you.

Experiencing the death of a loved one is hard. Be sure to know your rights if debt collectors descend. Don’t hesitate to contact a Henry+Horne professional adviser with any questions.

Melinda Nelson, CPA