No, when someone dies due to a debt, the debt doesn't go away. In general, the deceased person's estate is responsible for repaying any outstanding debt. When a person dies, their assets pass to their estate. If there is no money or goods left, then the debt will generally not be repaid.
An executor can be held personally liable for the debts of the estate up to the value of the estate. If they distribute the estate and leave a creditor pending, that creditor can file a lawsuit against the executors. This is the case even when the executor had no idea that the debt existed. When bills begin to arrive after a death, the executor may worry about being personally on the hook for the deceased person's debts.
But if that's your situation, you can relax. In most situations, you won't have to use your own money to pay off estate debts. Sometimes there aren't enough assets in the estate to pay off all of the estate's debts. In these cases, the Probate Administration Act sets priority for the payment of debts.
Reasonable funeral and estate administration expenses are paid before any other debt. The executor or administrator is not personally liable for estate debts when properly managed, nor is any beneficiary under a will. However, it is important that executors and administrators follow the legal distribution scheme to avoid being personally liable for some debts. The executor is responsible for paying all outstanding debts on the estate's assets.
The executor is not personally liable for debts, and the Fair Debt Collection Practices Act prohibits collection attempts against a surviving relative or beneficiary. Gifts and promises from elderly people with dementia, or made under the undue influence of another person, may be challenged by estate. Later, it turns out that the estate does not have enough money to pay all of its debts and some unpaid bills, including expenses from the last illness, have a higher priority under state law than credit card debts. It's always a good idea to consult with an attorney experienced in estate management matters to ensure that you pay all debts properly, so that you don't submit to personal liability.
Creditors of secured debt have the ability to take possession of the item used to secure the debt, or they can receive payment of the estate. When a child under 18 years of age is a beneficiary under a will, the executor may be authorized to administer the minor's share of the estate until the minor turns 18 or older. Debts incurred by the deceased person while alive, or expenses incurred by the estate after death, must be paid with the ownership of the estate. Executors and administrators are responsible for paying all fair debts on the estate before distributing it to beneficiaries.
If you suspect that there are not enough estate funds to pay the deceased person's debts, be careful not to pay anything, either with your own money or with estate funds. The executor can be held personally liable for the non-payment of the debts of the estate in the correct order established by law. The executor of your estate will gather all the assets of the estate and make an accounting of all debts or liabilities. The executor or administrator is responsible for distributing the estate to legally authorized persons to all or part of the estate.
An executor or administrator who fails to do this may be personally liable for the amounts that were improperly transferred from the estate. In New York State, there is a creditor period of seven months, which runs from the date of appointment as executor, not from the date of death. Credit card debts are the last debts of the estate that must be paid if the executor thinks that the debts of the estate exceed the assets of the estate. The executor must make an inventory of the deceased assets (the car) and the debts (the car loan, credit card balance, mortgage, etc.).
The law imposes a good faith standard on the executor to determine the payment of claims against the estate. . .