When a loved one passes away, it’s sometimes hard to imagine a life without them. There may be bits and pieces of them everywhere, a reminder of the life they led. But according to the Federal Trade Commission (FTC), those reminders might be related to their debt. One out of five Americans die with an average debt of $62,000. And for their grieving families, this can lead to additional difficulties at a very distressing time.
Who is responsible?
Often family members are not obligated to pay their loved one’s debt from their own assets as it is the loved one’s estate that is responsible. But there are certain cases where the loved one may be responsible. The most common cases are:
- Co-signed the loan
- Live in a community property state (mostly in the West or Midwest)
- State law requires the spouse to pay a type of debt such as health care expenses (in Florida generally the debt of the spouse is their own and not the responsibility of the surviving spouse)
If you are receiving an asset such as a car or home, your asset may be encumbered but the debt doesn’t shift to you unless you agreed to be personally responsible. In the state of Florida if you are a personal representative your status does not make one responsible for the decedent’s debt.
How can the debt be collected?
Once it has been established that you are responsible for the debt, debt collectors can contact you directly or can get your contact information from third parties including family members – but they cannot say anything about the debt to the third party. This process is in place so that a new payment system between you and the debt collectors can be established. All consumers – including family members – are protected by the federal Fair Debt Collection Practices Act (FDCPA) which prohibits debt collectors from using abusive, unfair or deceptive practices to try to collect a debt. You can choose to stop communications between you and the debt collectors while you are mourning, but the debt will still be your responsibility.
Important Step to Take
One of the most important steps to take is to analyze your loved one’s assets with appropriate legal representation. There may be hidden debts, also known as old debts that are attached to assets. These can further complicate the orderly distribution of the estate. Knowing your rights and responsibilities will help you to decide what best serves you and your family during this difficult time.
