You may be worried that you would be responsible for your parents’ debts if they died. But in most cases, you would not be held liable for paying off your deceased parents’ debts.
There are a few exceptions, however. Your parents’ debts can be transferred to you if:
- You are a co-signer on the account.
- You are a joint debtor.
- You are the executor of your parents’ estate.
If you are not responsible for paying off your deceased parents’ debts, creditors may still try to collect from you. They may do this by:
- Asking you to pay voluntarily.
- Putting a lien on your property.
If a creditor is trying to collect from you, tell them that you are not responsible for the debt and ask them to stop contacting you. If they continue to try to collect, you can file a complaint with the Consumer Financial Protection Bureau.
You may also want to consider hiring a lawyer if the creditor is taking legal action against you.
If you are responsible for paying off your deceased parents’ debts, you may be able to negotiate with the creditors. You can try to:
- Get a lower interest rate.
- Set up a payment plan.
- Have late fees and penalties waived.
Creditors are not required to agree to your requests, but it is worth a try. You may also want to consider hiring a lawyer to help you negotiate with creditors.
1. Learn as Much as You Can About Your Parents’ Debt
You may feel obligated to help your parents become debt free after they die. Usually, you won’t be aware of your parents’ debt levels or which of their payments were paid on a regular basis and which required special attention.
Therefore, before you do anything, make sure you understand the situation. Get a copy of your parents’ credit report. This will show you what debts they have and who the creditors are.
2. What to Do Next About Your Parents’ Debt
You should also get a copy of the death certificate. You will need this to prove to creditors that your parent has died. If you are named as the executor of your parents’ estate, you will need to get a copy of the will. This document will spell out what debts your parents want to be paid off and how they want their assets divided.
Call the creditors associated with your deceased parent’s credit card and loan accounts first. Share the news of your parent’s passing with each of them. Then the creditor will cancel your deceased parent’s account. Meanwhile, let the creditor know that the probate process will be used to settle this debt.
Probate is what the state or lawyers do to either validate a will or appraise the estate. If there is no will, the state will use the deceased person’s estate’s assets to settle any debts. A court may need months to resolve this.
3. Know Your Rights
It is important to know your rights when it comes to your parents’ debt. You are not legally responsible for paying off your parents’ debts unless you are a co-signer, a joint debtor, or the executor of your parents’ estate.
Creditors may try to pressure you into paying off your parents’ debts, but you are not obligated to do so. If a creditor is trying to collect from you, you are protected by the Fair Debt Collection Practices Act (FDCPA). This law forbids debt collectors from employing unfair, abusive, or deceptive tactics.
Some examples of illegal debt collection practices include:
- Calling you before 8 a.m. or after 9 p.m.
- Calling you at work if you have told them that you are not allowed to receive calls at work.
- Calling you repeatedly or calling you so often that it becomes harassing.
- Threatening to hurt you, arrest you, or take away your property.
- Lie to you about the amount of money you owe or what will happen if you don’t pay.
- Using profane or obscene language.
4. Consider Your Options
If you decide that you want to help your parents pay off their debts, there are a few things you can do.
You can negotiate with creditors to try to get a lower interest rate, set up a payment plan, or have late fees and penalties waived.
Remember that creditors are not required to agree to your requests, but it is worth a try.
You can also make payments on the account yourself. But be aware that if you make a payment, you may be giving the creditor the right to sue you for the full amount of the debt.
5. Consider Hiring a Lawyer
If you are being sued by a creditor or if a creditor has placed a lien on your property, you may want to consider hiring a lawyer. A lawyer can help you understand your rights and options. They can also represent you in court if necessary.