Question:   I’m seeking debt management tips. My parents are elderly, am I responsible for their debts after they pass on?

Answer:      Amidst the grief and funeral planning, financial considerations can easily get lost in process. However, eventually these issues reappear and must be dealt with by the survivors.

This is one of the most common questions that people ask about. It is the sort of subject many people do not wish to approach with their parents. The result is that all too often parents pass on without discussing their finances with their children.

You can ease your mind somewhat with the knowledge that you are not responsible for the debts left by your parents after they pass away. The only real debts you are responsible for are your own, and by following our valuable debt management tips, you should be able to remove debts those from your life forever.

Another key point to keep in mind regarding your parent’s debt is that if you are a co-signer on any loans with them then you are still liable for the debt. At any time during their life you co-signed any forms with any one of your parents (such as mortgages or credit card accounts), then you have assumed the responsibility of paying those accounts as agreed until the debt is paid in full and the account is closed.

This is why we state often in our debt management tips to avoid co-signing any documents with family, friends, or anyone for that matter.

After a parent has passed away, it is the responsibility of the “executor” to handle their estate and to pay off their debts as much as possible using the remaining money or assets that are within the estate.

When all the debts are satisfied, the remaining funds will go to surviving heirs as dictated in the parents’ will.

Do be sure to check for any life insurance policies your parents may have owned. Sometimes these policies are purchased decades before a death, so be sure to verify the current status of any old policies and claim whatever is owed.

The deceased person’s debts to creditors are always paid before any heir receives any money or assets. If debts are greater than the liquid assets (cash, securities, etc.) held in the estate, then the property assets are sold in an effort to cover the remaining debt.

Secured debts such as mortgages are repaid first, then unsecured debts such as credit cards or medical bills.

If your parents were responsible with their finances, then you should have no worries about any debts left behind. If, however, there are remaining debts to be paid, you will have to work with the probate judge and/or executor to offset this debt with available assets.

Our final debt management tip on this subject is the following: Whether the debts of your parents are large or small, do not let the issue of money take away from the memory to your loved one.

Assume your loved one did the best he/she knew how to do. Now it’s time for you to do the same. Take ownership of the issues needing to be resolved – make your parents proud.

» Out of all the consumer debt solutions, is consumer credit counseling a good idea and are these agencies for real?
There are some agencies that provide good quality consumer debt solutions. Consumers can find a ton of helpful information here on our website.

» Regarding credit card laws: I co-signed for a credit card. Is there any way to get out of it? What if the other co-signer files bankruptcy?
If the co-signer has filed bankruptcy or is getting ready to file, you should payoff the account in order to avoid having your own credit report damaged.

» How do debt collection laws work? I’m being harassed by my collectors. How should I handle them?
There are debt collection laws and regulations that creditors are expected to follow. But the truth is that many do not. Collectors are not all bad, many are just doing their job.

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