General Question

pleiades's avatar

What happens to ones debt when someone because deceased?

Asked by pleiades (5925 points ) March 1st, 2014

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10 Answers

XOIIO's avatar

I think it gets passed on the living relatives or children.

talljasperman's avatar

It comes from the estate and anything left over goes to the people listed in the will.

Darth_Algar's avatar

The debt is paid, to whatever degree possible, from the deceased’s estate, it does not get passed on to the deceased’s survivors. Inherited debt has long been a thing of the past.

jca's avatar

If there’s not enough money in the estate, the relatives are not obligated to pay it.

JLeslie's avatar

I agree the debt gets paid by the estate and doesn’t get passed down. One question I have about it though, if I may, is if there is a mortgage on a house for instance, and it can’t be paid by the estate, then the company holding that note gets the house not someone in the will. Is that correct? If not, how does that work?

Darth_Algar's avatar

@JLeslie

Certainly I’m not expert on estate matters, but I would imagine that a mortgaged property could still be foreclosed on. Maybe the heirs can choose to take on the mortgage or something though.

kritiper's avatar

In some cases, if not all, a lien is placed on the property of the deceased.

cazzie's avatar

Assets are sold to pay the debt, and if there are any liens or guarantees by third parties (like a rich uncle or a parent may have co signed a loan or put one of their assets up as collateral..) then those avenues will be pursued. If a person leaves something in their will that has been used as collateral against a loan and it is not paid off, (the item is not free-and-clear), if other financing for that capital item is not organised in a timely manner, it will be foreclosed on or repossessed by the financial institution owed the money.

One of my jobs at the accounting office was watching the bankruptcy and death notices. Who was being ‘wound-up’ or put into receivership was of intense interest to our partners.

Stinley's avatar

In the UK, you have to have insurance on your mortgage that pays off the balance if you die. It’s a condition of your mortgage.

jca's avatar

In the US, if the mortgage is not paid, they just take your house. So it’s to the advantage of the heirs to pay off the house.

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