Debt and the death of a parent

[vraiblonde]

I had a conversation with a friend today who has creditors bothering her about her deceased mother's debt, so I thought I'd share this information.

In short, you are not responsible for your parents' debt when they pass.

http://www.nerdwallet.com/blog/finance/estate-planning/parents-die-inherit-debt/

It's amazing that people don't realize that, and will actually dig into their own pocket to pay off credit cards, etc, for their parents. Even if you are the executor of their will, you are still not personally liable for their debt. You'll be responsible for selling their stuff in order to pay off creditors, but there will be no money out of pocket on your end.

There are special circumstances to be considered, for example if you are a cosigner on their loan, or the parent is in a nursing home and you live in a state with a filial support law (Maryland is one).

Anyway, there's your PSA for the day.

 

[Tilted]

I had a conversation with a friend today who has creditors bothering her about her deceased mother's debt, so I thought I'd share this information.

In short, you are not responsible for your parents' debt when they pass.

http://www.nerdwallet.com/blog/finance/estate-planning/parents-die-inherit-debt/

It's amazing that people don't realize that, and will actually dig into their own pocket to pay off credit cards, etc, for their parents. Even if you are the executor of their will, you are still not personally liable for their debt. You'll be responsible for selling their stuff in order to pay off creditors, but there will be no money out of pocket on your end.

There are special circumstances to be considered, for example if you are a cosigner on their loan, or the parent is in a nursing home and you live in a state with a filial support law (Maryland is one).

Anyway, there's your PSA for the day.

I had a friend who shared a residence with her mother for many years. They owned the property as joint tenants (i.e. with rights of survivorship). Her mother died with meaningfully no assets but a bit of credit card debt. There was no probate process, there wasn't a need.

Anyway, a little while later my friend started getting calls from a debt collector regarding her mother's remaining credit card debt. They wanted her to pay her mother's debt. She told them she didn't have any money to pay them but would try to pay what she could when she could. They continued to call and at some point started threatening that they would get some kind of judgment against the property and eventually take it away from her. She was pretty upset, pretty scared. She eventually told me about the situation, asking what she should do. I told her to tell them, the next time they called, that she was authorizing them to speak to me about her situation and that I would be allowed to speak on her behalf - further, that no matter what they threatened her with she would not speak to them anymore until they had first spoken to me.

So they called me. It took every bit of restraint I had to not go off on them from the get in a profanity laced tirade. I explained that the property had been owned in joint tenancy, did they know that? Yes, they knew. Do you know what that means? Yes, we understand. So you know you can't do anything as regards that property - it belongs to [my friend] now, it didn't need to pass through probate. Yeah, we understand. So why are you calling [my friend] threatening her? We aren't threatening her, we're just trying to collect a debt. But she (my friend) doesn't owe you money, the person that owed you money is dead now and there were no assets - no estate to recover from. And you know that you're actually prohibited by law from discussing that debt with someone else without authorization from the debtor - you can ask friends, e.g., how to contact the debtor, but you can't discuss details of the debt you're trying to collect. Well, well, well... we're just trying to collect the debt, if [my friend] doesn't want to pay it then that's okay. You're MFing right it's okay. She doesn't owe you anything. You aren't trying to collect a debt, you're committing fraud - you know that the person you're threatening (with something you know you can't do) doesn't owe you anything. So this is gonna be your only warning - do not attempt to contact [my friend] again. At this point we consider your efforts to contact her harassment, and I believe you are violating a number of laws. Well as you know, she can request we stop contacting her but she has to do so in writing in order for it to prevent us from contacting her. Bull####, you're talking about debt collection laws - that would be the case if you were legitimately trying to collect a debt. Again, you are not, you're just running a scam and harassing a party with which you have no connection - no debt which you might legitimately try to collect. Do not contact her again.

Then came the part that brought me back from the verge of blowing my top and replaced that sensation with one of hilarity. The lady on the phone finished by saying something like - okay, we won't contact her anymore, we were just giving her the opportunity to do the right thing and pay off the debt that her mother owed. That got me laughing, I said thanks and goodbye and that was the end of the matter. They never called my friend again as far as I'm aware.

Anyway... yeah, people don't know all of their rights and such, how everything works - how can they be expected to? And there are plenty of scumbags around willing to try to take advantage of that reality. My friend was really scared, by the time she finally talked to me about it she was worrying herself to the point of not being able to sleep. There was never anything these people could have done to her (other than trying to defraud her as they were), but she didn't know that.

 

[Bann]

I had a conversation with a friend today who has creditors bothering her about her deceased mother's debt, so I thought I'd share this information.

In short, you are not responsible for your parents' debt when they pass.

http://www.nerdwallet.com/blog/finance/estate-planning/parents-die-inherit-debt/

It's amazing that people don't realize that, and will actually dig into their own pocket to pay off credit cards, etc, for their parents. Even if you are the executor of their will, you are still not personally liable for their debt. You'll be responsible for selling their stuff in order to pay off creditors, but there will be no money out of pocket on your end.

There are special circumstances to be considered, for example if you are a cosigner on their loan, or the parent is in a nursing home and you live in a state with a filial support law (Maryland is one).

Anyway, there's your PSA for the day.

I realized this when my dad died. I was already ahead of the game when my mom passed away.

 

[Freefaller]

Also to note: Life insurance payments to a beneficiary are not considered part of her estate. Debtors have no rights to that money. I suggest you get a dozen or so certified copies (Can be notarized by a notary public), If her funeral expenses, exceed her estate, there is no money to pay debtors. Send them a copy of the death certificate and tell them to write off the debt. Also, don't forget that you'll have to have her income taxes done. YOU can pay a tax preparer out of her estate. Make a trip to the courthouse and see the county Register of Wills. They can be very helpful to you and help guide you through the legalities of settling her estate! Good Luck.

 

[DEEKAYPEE8569]

I had a friend who shared a residence with her mother for many years. They owned the property as joint tenants (i.e. with rights of survivorship). Her mother died with meaningfully no assets but a bit of credit card debt. There was no probate process, there wasn't a need.

Anyway, a little while later my friend started getting calls from a debt collector regarding her mother's remaining credit card debt. They wanted her to pay her mother's debt. She told them she didn't have any money to pay them but would try to pay what she could when she could. They continued to call and at some point started threatening that they would get some kind of judgment against the property and eventually take it away from her. She was pretty upset, pretty scared. She eventually told me about the situation, asking what she should do. I told her to tell them, the next time they called, that she was authorizing them to speak to me about her situation and that I would be allowed to speak on her behalf - further, that no matter what they threatened her with she would not speak to them anymore until they had first spoken to me.

So they called me. It took every bit of restraint I had to not go off on them from the get in a profanity laced tirade. I explained that the property had been owned in joint tenancy, did they know that? Yes, they knew. Do you know what that means? Yes, we understand. So you know you can't do anything as regards that property - it belongs to [my friend] now, it didn't need to pass through probate. Yeah, we understand. So why are you calling [my friend] threatening her? We aren't threatening her, we're just trying to collect a debt. But she (my friend) doesn't owe you money, the person that owed you money is dead now and there were no assets - no estate to recover from. And you know that you're actually prohibited by law from discussing that debt with someone else without authorization from the debtor - you can ask friends, e.g., how to contact the debtor, but you can't discuss details of the debt you're trying to collect. Well, well, well... we're just trying to collect the debt, if [my friend] doesn't want to pay it then that's okay. You're MFing right it's okay. She doesn't owe you anything. You aren't trying to collect a debt, you're committing fraud - you know that the person you're threatening (with something you know you can't do) doesn't owe you anything. So this is gonna be your only warning - do not attempt to contact [my friend] again. At this point we consider your efforts to contact her harassment, and I believe you are violating a number of laws. Well as you know, she can request we stop contacting her but she has to do so in writing in order for it to prevent us from contacting her. Bull####, you're talking about debt collection laws - that would be the case if you were legitimately trying to collect a debt. Again, you are not, you're just running a scam and harassing a party with which you have no connection - no debt which you might legitimately try to collect. Do not contact her again.

Then came the part that brought me back from the verge of blowing my top and replaced that sensation with one of hilarity. The lady on the phone finished by saying something like - okay, we won't contact her anymore, we were just giving her the opportunity to do the right thing and pay off the debt that her mother owed. That got me laughing, I said thanks and goodbye and that was the end of the matter. They never called my friend again as far as I'm aware.

Anyway... yeah, people don't know all of their rights and such, how everything works - how can they be expected to? And there are plenty of scumbags around willing to try to take advantage of that reality. My friend was really scared, by the time she finally talked to me about it she was worrying herself to the point of not being able to sleep. There was never anything these people could have done to her (other than trying to defraud her as they were), but she didn't know that.

Tilted, I wondered about something similar when my Dad passed in October. Would Mom be getting calls from people claiming Dad owed them money?
As far as I know, no one has called. If this scenario happens to Mom, I have no idea what it's going to do to her sanity. But, it's nice to know that if I find out this did happen, and there's a phone# to be had, I'll be on the phone saying pretty much the same thing(s) you said.

 

[migtig]

I had a conversation with a friend today who has creditors bothering her about her deceased mother's debt, so I thought I'd share this information.

In short, you are not responsible for your parents' debt when they pass.

http://www.nerdwallet.com/blog/finance/estate-planning/parents-die-inherit-debt/

It's amazing that people don't realize that, and will actually dig into their own pocket to pay off credit cards, etc, for their parents. Even if you are the executor of their will, you are still not personally liable for their debt. You'll be responsible for selling their stuff in order to pay off creditors, but there will be no money out of pocket on your end.

There are special circumstances to be considered, for example if you are a cosigner on their loan, or the parent is in a nursing home and you live in a state with a filial support law (Maryland is one).

Anyway, there's your PSA for the day.

I will state from experience that laws vary from state to state about debts, inheritance, liabilities, etc. Be sure to check the laws in the state that your parent resided.

 

[mitzi]

Sadly with my Dad's death in September, I've learned a lot about this process. Thankful he only had a small credit card debt which will be taken care off when I sell his house from the estate account. They staked their claim when the ad ran in the paper. Dad would have wanted me to pay it off, but I'm just going to let them get it when the estate is settle. What he left me in his checking and savings will cover the mortgage payments, taxes, electric, etc. for awhile but I'm not getting into that money for Capital One, they can wait. I need it for the upkeep of his house. Hopefully the house sells soon. His final Verizon bill has been a cluster. I had intended on paying it until after notifying them 5 times to stop doing the automatic debit from his checking that was closed 2 weeks after he passed. As of December, they are still trying automatic debit and racking up service fees for "insufficient funds". I'm sick of notifying them and to the point that they will never be paid if I have anything to do with it. The Register of Wills office has been very helpful in advising me in all of this. It is all very overwhelming and stressful to say the least.

 

[DEEKAYPEE8569]

Sadly with my Dad's death in September, I've learned a lot about this process. Thankful he only had a small credit card debt which will be taken care off when I sell his house from the estate account. They staked their claim when the ad ran in the paper. Dad would have wanted me to pay it off, but I'm just going to let them get it when the estate is settle. What he left me in his checking and savings will cover the mortgage payments, taxes, electric, etc. for awhile but I'm not getting into that money for Capital One, they can wait. I need it for the upkeep of his house. Hopefully the house sells soon. His final Verizon bill has been a cluster. I had intended on paying it until after notifying them 5 times to stop doing the automatic debit from his checking that was closed 2 weeks after he passed. As of December, they are still trying automatic debit and racking up service fees for "insufficient funds". I'm sick of notifying them and to the point that they will never be paid if I have anything to do with it. The Register of Wills office has been very helpful in advising me in all of this. It is all very overwhelming and stressful to say the least.

With regard to the Verizon bill, would taking a copy of a death certificate to a Verizon store and proving things sound feasible? Insist on speaking to a manager.
I don't mean to sound cold, but Mom had to do that with a few things after Dad passed.

 

[b23hqb]

Debt collectors don't care who they have to force to collect debts. This has been happening to my MIL for over 20 years:

About 28 years ago, two of her nephews (my wife's cousins) lived with my inlaws in Clearwater, Fl, while they attended a year long airplane mechanics school, using her address as their place of residence. Both graduated and became successful mechanics and airplane inspectors. The school claims unpaid tuition. Both boys deny any unpaid debts to this day. About 15 years ago, just after my FIL died, Nannie began to get debt collectors calls and letters demanding payment for their "debts". Although my in-laws never signed any paperwork for any student loans, the collectors stance is that since the boys lived at her house during their schooling, she was responsible for any debt they incurred.

We had the state, a judge, and an attorney obtain cease and desist orders, but that doesn't phase the collectors as they just pass the buck from one collection agency to another.

Moral of story: Even if you have nothing to do with any relatives financial situation, these collectors will come after any relative they can find, for any reason, to collect either rightfully or not.

Caveat emptor.

 

[mitzi]

With regard to the Verizon bill, would taking a copy of a death certificate to a Verizon store and proving things sound feasible? Insist on speaking to a manager.
I don't mean to sound cold, but Mom had to do that with a few things after Dad passed.

No, it wouldn't help. It was for his home phone and the stores don't handle that. Thanks for the advice though, you didn't come across as cold at all.

 

[mitzi]

Debt collectors don't care who they have to force to collect debts. This has been happening to my MIL for over 20 years:

About 28 years ago, two of her nephews (my wife's cousins) lived with my inlaws in Clearwater, Fl, while they attended a year long airplane mechanics school, using her address as their place of residence. Both graduated and became successful mechanics and airplane inspectors. The school claims unpaid tuition. Both boys deny any unpaid debts to this day. About 15 years ago, just after my FIL died, Nannie began to get debt collectors calls and letters demanding payment for their "debts". Although my in-laws never signed any paperwork for any student loans, the collectors stance is that since the boys lived at her house during their schooling, she was responsible for any debt they incurred.

We had the state, a judge, and an attorney obtain cease and desist orders, but that doesn't phase the collectors as they just pass the buck from one collection agency to another.

Moral of story: Even if you have nothing to do with any relatives financial situation, these collectors will come after any relative they can find, for any reason, to collect either rightfully or not.

Caveat emptor.

And so many people will pay it, not knowing any better.

 

[Tilted]

Tilted, I wondered about something similar when my Dad passed in October. Would Mom be getting calls from people claiming Dad owed them money?
As far as I know, no one has called. If this scenario happens to Mom, I have no idea what it's going to do to her sanity. But, it's nice to know that if I find out this did happen, and there's a phone# to be had, I'll be on the phone saying pretty much the same thing(s) you said.

Hopefully you won't have to deal with this kind of thing. But if you do, you have to be careful to make sure you know what you're dealing with - that you know the legality of your mom's situation in particular. When it comes to spouses, a lot of stuff does pass directly to the surviving spouse when the other dies. But some stuff can have to go through probate, which can mean that creditors are entitled to collect debt they were owed by the deceased out of those things that have to go through probate. Before threatening a debt collector or getting hostile with them, you should make sure whether they're in the right and what options they may legally have. Don't let your mouth write a check your ass can't cash, or might be unwilling to cash.

In my situation I was certain of what was going on - I understood the legal issues and confirmed what needed to be confirmed, e.g. I pulled my friend's deed to make sure the property in question was held in joint tenancy. I knew for sure that I was calling a bluff, not pushing someone with legitimate legal options to take their efforts to the next level.

 

[DEEKAYPEE8569]

Hopefully you won't have to deal with this kind of thing. But if you do, you have to be careful to make sure you know what you're dealing with - that you know the legality of your mom's situation in particular. When it comes to spouses, a lot of stuff does pass directly to the surviving spouse when the other dies. But some stuff can have to go through probate, which can mean that creditors are entitled to collect debt they were owed by the deceased out of those things that have to go through probate. Before threatening a debt collector or getting hostile with them, you should make sure whether they're in the right and what options they may legally have. Don't let your mouth write a check your ass can't cash, or might be unwilling to cash.

In my situation I was certain of what was going on - I understood the legal issues and confirmed what needed to be confirmed, e.g. I pulled my friend's deed to make sure the property in question was held in joint tenancy. I knew for sure that I was calling a bluff, not pushing someone with legitimate legal options to take their efforts to the next level.

Of course, the knee-jerk reaction would be to tell these folks to howl, eat s**t and bark at the moon, but as politely and calmly as I could; I would ask for written proof of outstanding debt, so I have something to read. I've learned to never commit to, admit to, or sign up for anything over the phone.