If a person dies with outstanding debts, does the family inherit the debt?
If a person does not have a spouse, or children, are their siblings responsible for their debt when the person dies?
If a person does not have a spouse, or children, are their siblings responsible for their debt when the person dies?
Yep!
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It amazes me how many people try to give inappropriate, simple, blanket answers to questions, when the issue is often much more complex.
Speaking from a U.S. perspective, the handling of such debt depends on the state(s) involved and the type of debt it is. Generally, when someone dies and they have unsecured debt (like a credit card), the creditor will have to write off the debt. Creditors of unsecured credit have the last "take" of any assets left over after the debtor dies.
However, if the debt was secured (collateral was put up against the debt, like a house or a car), and the debt was not co-signed or shared by someone, then the creditor can repossess or foreclose on the property. Occasionally a transfer of the debt can be made.
Lastly, there are conditions were debts can be considered the responsibility of both spouses, even if the debt was incurred by only one of the two people. Example: in some states, both husband and wife are responsible for any healthcare-hospital type debts that are incurred by one of the two. If a man goes into the hospital for surgery, stays two weeks, then dies as a result of complications, his wife will be held liable for the cost of his care. The care provider may even request a lien against the woman's house/property until the debt is paid. (You can thank the healthcare system's high-paid lobbyists for this one!!)
Anyway, as you can see it all depends on the type of debt and where the debt was incurred. If you are facing the problem you describe, you may want to contact an attorney that handles such matters.
However, under no case can the debt be transferred to children of the debtor (unless they co-signed for specific debts). If the assets of the deceased are not enough to cover the outstanding claims, the debtors must take a loss on that debt. That is all part of the risk they take when they loan the money. (Incidentally, all debtors pay for that risk in the form of interest.)
Colette B
No but the person that is owed must file the debt with the estate and while any insurance payouts are in probate, the debt can be taken out before the family gets the money from an inheritance or insurance policy.
Anonymous
No but collectors often try intimidation to scare relatives into accepting another's debt. Look up some solutions on the internet but don't pay anyone for this information. You can figure out what you are liable for.
Mike M
No -- the estate of the person who died owes the debt.
How this will affect the spouse, children, siblings, etc. is that the creditors can file a lien against the estate to get their money back.
louisem28
No the debt goes with the person but u have to produce a death certificate to the debt agencies