It is very difficult to live an entirely debt-free life. Purchasing big-ticket items is a way of life (think homes, cars, and luxurious vacations) not to mention the things we need to pay for every month, like utilities, insurance, taxes, and medical bills. We do our best to pay off all of our debts, but cannot always do so in our lifetimes. So what happens to this remaining debt when you die? The answer is, “it depends.”

If a friend, family member, or other individual is jointly liable for any or all of your unsecured debts, such as credit card bills or personal loans, they become responsible for paying off the debt upon your death. However, if you were solely responsible for that debt, your estate may be liable for paying it off.

When a person dies, the Personal Representative of the estate must publish a notice in the newspaper for “unknown” creditors. Generally, the most appropriate place to publish is in the legal newspaper of the county in which the decedent lived.  The publication must notify estate creditors to present their claim(s) within four months after the date of the notice’s publication, or they will be forever barred. If the personal representative fails to publish for unknown creditors, creditors have three years from the decedent’s date of death to bring claims against the estate. Because of this, it is easy to see why publication is preferred – it allows the personal representative to administer the estate and distribute any proceeds to the Decedent’s heirs before the three year period has expired without fear that an unknown creditor will come forward in the future.

Once creditors have come forth with their claim(s), the personal representative must send them a “notice of disallowance of claim” if the Personal Representative does not intend to pay the bill. This notice states that the creditor will be forever barred from the entire claim or, in certain circumstances, a portion of the claim, unless they commence a civil action by filing a complaint against the Estate. This claim must be filed with the appropriate district, circuit, or probate court no later than 63 days after the notice’s mailing date. If the creditor does nothing, they are waiving their right to further pursue their claim against the Estate. This is oftentimes the case.

If the personal representative has either an 1) actual notice of the creditor or 2) the creditor’s existence is reasonably ascertainable by the personal representative based on an investigation of the decedent’s available records for the first two years immediately preceding death or mail following death, they are considered a “known” creditor. Known creditors are entitled to personal notice of the Decedent’s death. After that, the process flows similar to the process for unknown creditors.

If the creditor(s) fail to come forth with their claim within the requisite period of time, or the creditor fails to file a lawsuit within 63 days after the mailing or delivery of the notice of disallowance of claim, the estate is not responsible for paying the debt.

If the debt is secured, i.e. a mortgage on a house or a car loan, that debt must be repaid or the lender can repossess the assets used the secure the loan. These debts are generally handled on a case-by-case basis depending on the value of the asset, the amount left due and owing, and whether any of the beneficiaries wish to keep the asset.

Confused about creditor claims? That’s understandable. Please do not hesitate to contact us for a free consultation at 248.399.3300 or