Death is an inevitable occurrence that neither you nor your loved ones will ever be ready for. But while you cannot minimize your family’s grief in case something happens to you, you can prevent creditors from manipulating them into paying your debts and other liabilities, which can cause your family added stress. The first step is to help them understand how debt payment works after your death.
Creditors cannot go after your family’s personal property
Your debts and liabilities will not go away even when you die. Even so, your family members and heirs will not be personally responsible for them, and creditors cannot force them to pay for your debts. The Fair Debt Collection Practices Act (FDCPA) protects the decedent’s surviving spouse and family from abusive and manipulative collecting practices of creditors.
There are, however, certain exceptions when the deceased family members become responsible for paying the debts. This includes co-signing an obligation to pay the debts with the deceased and if the personal representative mishandles the estate resulting in failure to pay the creditors.
Your estate pays for your debts
Instead of going after the family and heirs of the decedent, creditors must file a claim against the debtor’s estate within two years of the debtor’s death. Unless they fall under the exceptions, they can no longer make any claim after this period. The debt goes unpaid if the estate has insufficient funds to pay off the debtor’s liabilities.
The estate representative is responsible for notifying creditors and publishing a public notice of the debtor’s death and the start of the probate proceedings.
The probate process can be complex, especially if it involves multiple assets and liabilities. Creditors may take advantage of this complexity and illegally collect debts from your loved ones. Understanding the process of debt collection and payment after a debtor’s death will help prevent these abuses and manipulation.