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What Happens to Debt When Someone Dies

written by: randalarias•edited by: Donna Cosmato•updated: 7/6/2011

Who is responsible for paying the debt of the deceased? What happens to a home that is jointly owned? Find out what happens to debt when someone dies.

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    What happens to debt when someone dies

    If a spouse passes away leaving debt only in their name, their spouse is not at all obligated to pay the debt. However, if the debt is on a credit card with both names or a joint account the spouse is still obligated to pay the debt. The spouse may not get off without any consequences though. Creditors are within their rights to go after the estate of the deceased. If a mortgage is in the name of both spouses creditors may even go after half of the home. If a spouse passes away with debt the best thing to do is contact an estate lawyer. So, family members can't be held liable for a relative's debt unless the debt is in a joint account or property, like a mortgage.

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    When are heirs and family members not responsible for debt?

    Family members and heirs are not responsible for the debt of a deceased family member if the debt was only in the name of the deceased. This includes anything from a mortgage or loan to a credit card. Although family members are not responsible for this debt it must still be repaid from the estate of the deceased. Creditors may go after the entire estate to get the money to repay the outstanding balance. The estate includes anything from cash and money in savings and checking accounts to insurance money, property and investments.

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    Debt & Mortgages

    If the deceased holds a home or property jointly, creditors may go after the property if there is not enough assets to cover the existing debt. In this case the other person or someone that inherits the home will most likely need to sell the home to repay the outstanding debt.

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    Joint Accounts & Debt

    If the deceased has any joint accounts when they die the other person will be required to pay any outstanding debt on these accounts. Common joint account debt includes credit cards and home mortgages.

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    A note about community property states

    If you live in a community property state the wife of the deceased will automatically become liable for all debts of the deceased. It will then be the wife's responsibility to pay all debts. In community property states, all income and debts are considered equal property of a husband and a wife.

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    "Debts of the Deceased." 14 May 2009.

    "What Happens to Credit Card Debt When Someone Dies." Blogging Away Debt. 11 November 2006. 14 May 2009.