Intelligence For Life…….. Could You Be Held Responsible for a Dead Relative's Debts?

Could You Be Held Responsible for a Dead Relative's Debts?

Let’s talk money. Could you be held responsible for a dead relative’s debts? Gerri Detweiler, a credit advisor and author of Slash Your Debt, says there are only two circumstances when you’re likely to be legally responsible:

• If you cosigned on a loan for the deceased.
• Or if you were married to the person, and you live in a “community property” state - such as Arizona, California, Texas, and seven others. This means that anything purchased during the marriage is owned jointly by both of you – but so is any debt that’s acquired. For example, if your husband has a separate credit card and maxes it out, you could be responsible for that debt if he dies. The specifics vary from state to state, so talk to your attorney and find out.

If it turns out that you are legally responsible for someone’s debt, ask lenders to negotiate. Detweiler says some are willing to accept half of what you owe, especially if you have limited income. Here are a couple more things you should know about a dead relative’s debts. These come from the Bottom Line Personal.

• If a lender negotiates, get the agreement in writing before you pay them. Lenders have been known to agree over the phone to settle a debt for less, process the payment – and then insist that a surviving relative still owes the full amount.
• Review your deceased relative’s credit card statements, car loan agreement, mortgage statements – and any other debts. Look for a mention of “credit insurance” or “credit protection plan.” If these are listed, your relative probably paid for insurance that would cover their debts if they died. Unfortunately, you’ll probably have to figure out for yourself if they were covered. Lenders and insurance companies often don’t disclose that information.

These are some general guidelines, but you always want to talk to your attorney if you have any questions. You can also check out Detweiler’s book Slash Your Debt.

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