What happens to a person's debt if he dies?

Hi Christopher

Welcome to the forums.

If someone owes a debt to an agency and dies in between, all his assets will be liquidated to cover the total debt amount. But if a person has nothing in his estate, the debts will also die along with him.

Regards
Roxette

Thanks for the help! One more thing. Is insurance considered an asset?

Christopher

Insurance is considered as an asset for the person only when he is alive. After he dies, the beneficiary holds the rights of it.

Regards
Roxette

Roxette

I've been kind of curious about this myself. What if I know nothing about the debt, and have moved all the furniture, and assets into my home, as well as had the attorney process all the insurance papers. I'm now being contacted a month later by collection agency...who is now collecting.

Am I repsonsible in paying this debt, as I have now complete control of all assets. Or can they just go away?

Regards-
Mike

Mike

You know that the collection agency must prove first that the debt they are holding is legitimate. If it is proven and the amount is considered to be a huge one, paying them will take priority first. Probate laws permits you to keep property for "small" estates under $10,000 through a simple procedure.

Usually, creditors or CA's might pursue collection of this debt only when any lien is attached to a valuable item or if it is a huge amount. In rest of the occasions, debt is not collected after the person's debt.

my mother in law had a loan when she died but took no insurance out, the bank took the outstanding balance out of her account when we informed them of her death is this leagal

Andr??a, this is perhaps an illegal move. Talk to your attorney in this matter and you might need to file a case against the bank. In general, the bank must furnish in writing how they are going to recover a loan amount upon a person's death. Check your mother's loan agreement signed with the bank. You might be able to know something more about this loan account.

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From I understand, once a person passes away thier bank account is frozen until someone with a court order arrives to take care of it. The same thing happened to my husband when his mother died. He went through a six month period where he had to go to court and place an ad in the local paper stating that anyone with a claim on the estate had until a certain date to stake a claim. We found that most of the small bills she still had outstanding did not come forward, and the one large bill only came forward to give thier condolances. Now her estate was less than $15000 including insurance so this might have something to do with that.