Families must pay the debt of a deceased? we answer

When it comes to the debt of a deceased, the responsibility will depend on the relationship. For example, children and grandchildren, as well as other family members, are not legally responsible for the debts of the deceased. However, if you sign a loan with the deceased, You will be legally obligated to pay the debt.

Spouses, on the other hand, may be liable depending on their state of residence and the type of debt involved.

If you live in a community property state, you as a spouse will be responsible for any unpaid debts, particularly those incurred since you were married. For example, if your spouse has a car loan, a couple of credit cards, and business debt, you will be responsible for the debts of the deceased,

Naturally, any loans you are required to repay jointly will be your responsibility no matter what state you live in.

What happens if you do not pay the debts of the deceased person
If you are legally responsible for paying the debt of the deceased, a creditor will go after you the same way they would any other type of debt.

If a payment hasn't been made in a while, the account will most likely go into collection. That will show up on your credit report, plus you will be harassed by the collection agency on a regular basis. This will include a combination of threatening letters and phone calls.

If you are unable to pay off the collection account, the creditor may request a judgment against you. If they do, they can garnish your wages and/or bank accounts.

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If you are retired, the creditor will not be able to pursue you. For example, a creditor cannot garnish income from Social Security, veteran's benefits, or federal and civil service retirement benefits. In addition, defined contribution retirement plans, like 401(k) plans, are exempt from creditor claims. And in most states, IRAs are also exempt.

However, please note that other assets may be subject to seizure. That can include pension income, income from work, non-retirement savings and investments, and real estate equity.

Even if you don't have any income or assets that a creditor can garnish, they may continue to hound you into paying up. And if you receive income or garnishable property in the future, the creditor can pursue it, even if the owner has deceased.