In some situations, yes, you could be required to pay certain debts a recently deceased individual had incurred. This information can certainly cause anxiety to a person who has already lost someone close to them. You need to know what debts you could be held responsible for so you can adequately prepare for them by speaking with an experienced Orange County bankruptcy attorney.
In most cases, creditors can be repaid from the deceased person’s estate assets. While this could mean you as a possible beneficiary may miss out on inheriting anything, you could at least have peace of mind knowing you will not be held accountable for anyone else’s debt. For the creditor, even if there are insufficient assets to pay off what they are owed, what is left gets written off as a loss.
Co-signed, Communal, & Student Loan Debt
Other debts can be passed down to you. The most typical debts are those you may have cosigned along with the recently deceased. This would mean being responsible for the debt even if you did not directly incur it. For assets purchased during a marriage, known as community property, a surviving spouse could be held responsible for the debt even if they were not a co-signer. You should know that California is a community property state, meaning all assets and debts are owned jointly.
In the event that the deceased still owed on their student loans, the question that matters is whether their loans were through the federal government or a private lender. The former typically allows for loan forgiveness if the borrower passes away, even if they become disabled. Private banks on the other hand usually make any co-signers of the loan pay the remaining balance. Other lenders are more willing to forgive debt in the case of death, but every private lender is different.
Medical debt in the case of a deceased parent, may include the state looking to the children of the deceased to pay their parents outstanding debt.
If you have lost a loved one and are concerned you may be held accountable for their remaining debt, speak with OakTree Law as soon as you can for the legal advice you need.
Call (562) 219-2979 for a no-cost consultation.