In the middle of your grief, you may also be concerned about overwhelming debt from your loved one’s medical bills or their mortgage payments. Collectors may have harassed you, or you may have heard confusing rumors that family duty obligates you to pay these debts.
Healing
If your loved one died as a result of negligence or another catastrophic situation, you should focus on healing from this emotional shock. You will need to make many decisions to lay your relative to rest, and you may decide to take legal action to bring the person at fault to justice.
A settlement from a wrongful death lawsuit may help you and your family heal financially, but until the case is settled creditors may still try to contact you.
Know the law
Texas law and the Federal Trade Commission state that unless you are co-signed on a loan or mortgage, you are usually not responsible for paying a deceased person’s debt. Unless you are the executor of someone’s estate, you should not have to pay their debt on their behalf.
There are some situations in which you could be liable for a deceased loved one’s debt:
- Credit card debt: Any co-signers to credit card accounts are responsible for the entire account.
- Student loans: Federal student loans are cancelled if the borrower dies, but co-signers could still be responsible.
- Retirement accounts: These cannot be threatened by creditors or used by beneficiaries to settle debts to creditors.
Houses and vehicles fall under the category of “secured debt.” If creditors or financial institutions are informed of the debtor’s death, they may try to force repayment. This could be in the form of threatening to foreclose on the house or repossess the vehicle. These calls can be frightening and frustrating.
If a vehicle or home is gifted to a beneficiary, they may choose to take on the outstanding debt with the permission of the creditor. Transferring this debt, however, often takes more time than a creditor allows. Hiring a legal professional can help you renegotiate deadlines and keep these gifts intact.
Creditors do not have the right to harass you into paying a deceased loved one’s debts. If you are liable for some debts, a wrongful death lawsuit could help. Now is the time to explore your legal options to defend the legacy your loved one built.