Creditors will often attempt to collect on the debts of an estate from the deceased. Sometimes they do have a right to collect and other times they do not. Creditors can be aggressive while trying to collect debt and may pressure you into paying off a debt that you do not necessarily owe. Understanding the law is important so that you can avoid being bullied into paying off debt you do not owe.
When Do I Have To Pay My Loved One’s Debt?
In general, the rule of thumb is that you cannot be held personally responsible for the deceased’s debt. You may be responsible if it is a joint account, or if is your spouse’s debt in a community property state. South Carolina is not a community property state. Further, a creditor may attempt to collect from the estate of the deceased. The creditor has a right to assets before they are passed on to heirs, however, there are some assets that are exempt. Also, if the assets in the estate do not cover the amount owed, the creditor is out of luck. A creditor cannot collect money beyond what the estate has.
The creditor should talk to the executor regarding any debt owed. If you are the executor, you may want an attorney’s assistance in determining the best way to pay off debt. Otherwise, if you are being contacted by creditors, you have no obligation to respond to them and should refer them to the executor. If you are not an immediate family member or representative of the estate, then the debt collector is forbidden from discussing the debt with you and may be in violation of the law.
Reporting The Death
If you have been appointed as executor, then it is your duty to notify any creditors of the death. It is also important to prevent identity theft by notifying the credit reporting agencies of the death and requesting a credit report. The Social Security Administration is supposed to notify all credit reporting agencies, but it is a good idea to take the responsibility of making sure it has been done. Identity thieves target the accounts of the deceased and notifying credit reporting agencies will help prevent identity theft.
No Personal Liability For Debts
You are not obligated to pay the debts of the deceased from your own assets, generally. If the estate has insufficient funds to cover a debt, the creditors simply do not get the money. Creditors frequently violate the law in their overly aggressive attempts to collect debt. If you are not the executor, they have no right to call you for any reason other than to get the contact information of the executor. If you are being harassed by a debt collector, the best course of action is to send them a letter via certified mail asking them to stop contacting you.
Contact An Attorney
After the death of loved one is a difficult time to handle complicated finances. Harassment from creditors is unwelcome and may even violate the law. If you are the executor of an estate and have been overwhelmed by aggressive creditors, the lawyers of the De Bruin Law Firm can help. You need an estate planning attorney who knows which debts you are and are not obligated to pay.