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A Guide to Debt After Death

A Guide to Debt After Death

A eraser with a debt word
A green eraser is going to erase a debt word

When people in Illinois die with debt, the money owed typically has to be repaid by the estate. The way a deceased person’s debt is handled, however, depends on a variety of factors including whether there was a joint borrower or co-signer, the debts are secured, and assets exist to pay off amounts owed.

A 2017 study by found that almost three-quarters of Americans have outstanding debts after death.

What if the Estate Cannot Pay?

In addition to covering any operating costs of the estate and legal fees, decedents’ estates are liable for any outstanding debts. If the estate has no assets or money runs out before the debts are paid off, the executor may petition the court to declare the estate insolvent. Any debts remaining at that point are written off by creditors if no one else is found financially responsible.

Do Surviving Family Members Have to Pay?

When people in Illinois pass away, their debts are not generally passed on to those they leave behind. With few exceptions, family members do not have to pay off the debts of deceased loved ones with their own personal funds. Decedents’ medical bills are generally passed on to their spouses, however, and become their responsibility.

Although they may not be personally liable, collectors may contact certain family members to resolve their deceased loved ones’ debts. However, they cannot provide false information, coerce family members to pay off debts using their personal funds, or discuss the debt with anyone other than the executor or administrator.

When Are Others Responsible?

While the debts left behind by a decedent are generally the responsibility of his or her estate, there are some situations in which others may liable for the balances owed. For example, loan co-signers may have to pay back the remainders of loans if the estates of the deceased cannot cover the debt. Joint borrowers are generally liable for the entire balance when money was borrowed together. Authorized users, on the other hand, are not on the hook for decedents’ debt.

Loved ones who wish to keep homes with mortgages or cars with outstanding balances will typically be required to pay amounts owed or relinquish the property in question.

Should they fail to comply with the state’s probate laws or if they otherwise act irresponsibly in settling their deceased loved ones’ affairs, estate executors may be liable for certain outstanding debts.

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