Debts After Death

by   |  09.20.11  |  financial planning, real life examples

CNN/Money has an article on banks and other creditors trying to collect on outstanding loan balances from family members of the deceased.  While creditors certainly do have the right to collect on outstanding loans, how and where they try to collect and from whom they try to collect can be a point of contention between companies and grieving members of the deceased’s family.

This article got me to thinking: are there situations in which a spouse or surviving family member might be liable for the debts incurred by the deceased?

Actually, yes, but only a few.

Surviving Spouses: Depends on state law, particularly for Texas residents (a community property state).  The short, uncomplicated answer is that if the deceased spouse incurred the debt before marriage, or if the debt was incurred separately by the deceased spouse during marriage, the surviving spouse is probably not liable for the debt.  Any debt entered into jointly is probably going to have be repaid by the surviving spouse.

Other surviving family members: Unless you personally co-signed or acted as guarantor for the debt, you are not liable for repayment.

As far as how and where, and from whom, creditors attempt to try to collect, there are two relevant legal points: the federal Fair Debt Collection Practices Act and your state’s version of the same law.  The federal law places certain prohibitions on third-party collection agencies (but not banks or other primary creditors) in their efforts to collect debts.  Texas state law essentially extends the federal law to all creditors, making it illegal to call debtors outside of certain times, to talk to anyone other than the debtor about the debt, or to verbally harass the debtor.  Other states will have different laws.

If you think you are not legally liable for the outstanding debt of a deceased loved one and creditors are calling you about it, start by talking (calmly) with the creditor.  Write down the caller’s name, call time, and gist of the conversation.  Ask them to provide proof that you are the responsible party.  If they are not willing or able to provide proof to you, they should stop trying to collect from you.  If they do not, you may want to be in contact with an attorney or the office of your state’s attorney general.


Next week: three questions you should be asking about your assets.

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Disclaimer: All information on this blog is for educational purposes only.  Employees of The ACU Foundation, and the writer of this blog specifically, are not attorneys and are not your adviser.  Call us or come see us if you have any questions about this.   See here for a more comprehensive (and more boring) version of this disclaimer.