Debt of Deceased Parents

Submitted by GraciousBassist t3_z8xq65 in personalfinance

I have recently been contacted by a lending company which my parents had consolidated debt through about taking financial responsibility for their debt. The reason for the post is that my parents have been deceased for a few years now (9 years for one, 3 for the other). I recall finding information originally that if not contacted about financial responsibility for the loans within 1 year of passing that they have no right to attempting to force the responsibility or to any amount of the estate at that point. Is it the right decision to inform the lender that I will not be taking the financial responsibility due to the time since my parents passing? Any advice is greatly appreciated.

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Grunchlk t1_iydw24y wrote

Did you co-sign on any loans or debt consolidation agreements? I would politely ask this company to explain why it is they believe you're responsible for any portion of it and then back that up with a written document mailed to you.

Generally speaking, in the US anyway, when a person dies their estate now owes the debt. The is what probate is for, through probate the executor consolidates the decedent's assets, pays their debts, and this disburses the funds to the heirs.

It's more complicated than that, but that's the gist. Many companies will try to guilt you into taking ownership of the debt. If you're the heir of an estate that when through probate and you didn't co-sign on any loans then they're just trying to get you to give them money for free.

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GraciousBassist OP t1_iydwroz wrote

Due to the nature of the second death, we had no will for the estate and I had to go through probate court to be able to be the executor of the estate at that time. To answer your question about cosigning, no I did not cosign on this loan.

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Grunchlk t1_iye6hsk wrote

If the estate went through probate (assuming all protocols were followed) and you didn't cosign then you shouldn't be on the hook for anything. I would politely tell them the estate is closed and if they have further questions they can contact the court. The court will have all your filings for notifications and such, so they'll be able to see they missed out on being able to collect. There's a limited window for creditors to come collect money for this very reason.

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RelishMule t1_iydvce6 wrote

I am assuming their estate has already been disbursed?

One thing is for sure, DO NOT make any agreement or make any payment until consulting a lawyer

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GraciousBassist OP t1_iydvsjb wrote

Yes, it has. All other debts were paid off as I was made aware of them at that time as well.

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altmud t1_iydw1li wrote

Things like this are very much dependent on state law.

First, though, I assume you are not talking about assuming the debt yourself, you are acting as executor of the estate, yes?

I know in California the debtor must make a claim within 1 year of death. However, in addition, the estate is required to notify all known creditors of the death within a certain amount of time, did you do that? Since obviously the estate should have known about this creditor. (But this is California, I don't know about other states).

Most states also require an estate notice to be published in a newspaper.

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[deleted] t1_iyducwe wrote

[deleted]

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GraciousBassist OP t1_iyduosh wrote

The debt at that time from what I can tell was being paid on a monthly payment plan at that point, but had not been fully paid when the second parent passed away.

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Banea-Vaedr t1_iydzjyt wrote

Don't pay them any amount at all without talking to a lawyer or CPA

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BitterPillPusher2 t1_iye4rm8 wrote

YOU don't owe them squat. Their estate may owe them, but my guess is that their estate was settled long ago and those creditors missed the window of opportunity to file a claim against the estate. I think they are basically SOL.

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SkyliteBlueSnake t1_iyedxkc wrote

Did you follow your state-specific rules on what an executor has to do to notify creditors? (this varies very much by state. Some states require the executor to put in some effort into tracking down creditors others only require that an executor take out an ad in an approved newspaper for a certain number of weeks). If you followed your state's rules on tracking down creditors and paid the identified creditors in the order that is required in your state, you can tell this debt consolidation company "too bad, so sad."

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