Articles - Archived Expert Advice

Outstanding Debt

My brother had a lot of credit card debt when he died, and now his creditors are calling me for payment. Am I personally responsible for paying his debts?

It is a common belief that all debt is forgiven when you die, but that may not be the case. When you die with outstanding debts, creditors can file a claim against your estate for payment.

Claims that are approved by a probate court are paid out of estate assets. Therefore, assets held by the estate, such as checking, savings and money market accounts; share term certificates; and brokerage accounts, may have to be liquidated to pay off debts before the property can be divided among the deceased's next of kin.

Even if a creditor's claim is rejected in probate court, they can still sue the estate for the money. When there is not enough money in the estate to pay all debts, the court will decide who will be paid, and in what order. To satisfy any remaining debts, estate assets (such as furniture or cars) may have to be sold.

The good news is that family members cannot be held personally responsible for debts of another individual—if the debt is in the deceased's name alone. A surviving spouse is not responsible for a debt created by their partner, as long as that spouse was not a co-signer or joint owner. If accounts are held jointly when one owner dies, the co-signer is responsible for making payments on that account, unless credit life insurance was purchased at the time the account was opened.

On another note, beware of scam artists who contact grieving families demanding payment on debt—especially when you have no record of that debt. Get proof that the debt is valid before sending payment, or seek legal advice from an estate attorney.