Losing your spouse is likely one of the most painful experiences you’ll ever go through. Unfortunately, this is only the tip of the iceberg. While processing your grief, you have to go through funeral planning, handling their final affairs, and in some cases—calls from debt collectors. Whether you’re looking ahead to the future or dealing with this right now, it’s important to know what happens to your spouse’s personal debt after they pass.
Handling debt is stressful, but understanding your options can help. Call the Mobile bankruptcy and debt consolidation attorneys at Padgett & Robertson today to set up a consultation—you can reach us at 251-336-3695.
Your Spouse’s Estate
When someone passes away while owing money to other parties, their estate becomes responsible for paying those debts. That may include the individual’s savings, money in checking, retirement accounts, and other assets. Before those assets can be distributed to beneficiaries, all debts owed by the individual must be paid from those assets. If the amount owed exceeds the amount of assets, the creditors cannot then go after surviving family members. The only way the family members are financially affected is if they had planned on receiving something from their loved one’s estate—if everything in the estate goes to debt, there will be nothing left for beneficiaries.
It’s important to note that your spouse’s debts don’t automatically become yours after they pass away. This isn’t always the case; in community property states, debts taken on during a marriage may actually become the responsibility of the surviving spouse. Since Alabama is not a community property state, you don’t have to worry about this.
It’s a bit of a different story when it comes to joint debt. If you and your spouse both took on a mortgage, car loan, or other type of debt together, that responsibility will likely become solely yours when they pass away. In most cases, two people who take on debt together are considered “jointly and severally liable” for that debt. This means that everyone who agrees to take on the loan is responsible for the debt. You are responsible both as a couple and as individuals. Even if one party stops paying their share, both parties are still responsible for the entirety of the debt. It’s important to understand which of your partner’s debts are solely theirs and which are shared with you, so you can plan appropriately if they pass away. This ensures that you don’t unintentionally harm your credit score by failing to pay a loan you don’t know about.
Remember, too, that this doesn’t just apply to debts that you both benefited from. For example, if your spouse had poor credit, you may have co-signed on a car loan or other type of loan to help them get a better interest rate. That loan would become your sole responsibility if they passed away.
What to Do If Collectors Come Calling
The fact that your spouse’s debts may not be your legal obligation after they pass away does not stop debt collectors from doing whatever they can to get a payment. There are many sad—and frankly, appalling—stories of spouses who have been conned into paying a deceased spouse’s debts simply because they did not know their rights. Debt collectors may imply or outright state that the debt is your responsibility. This is illegal, and if they take it even farther, they risk massive fines. The Fair Debt Collection Practices Act limits how collectors can attempt to collect on debts. If you’re not sure whether or not a debt is valid, you can ask the debt collector to contact you only in writing. You can use that time to talk to an attorney and find out if the debt is your responsibility or if it’s even legitimate.
Choose Padgett & Robertson for Help With Managing Debt in the Wake of Tragedy
Navigating debt after a loss can make an already painful time even more stressful. If you’re uncertain of your rights or if you’ve been left with a significant amount of jointly-owned debt after a death, it may be time to look at your legal options. Call Padgett & Robertson at 251-336-3695 or reach out online to set up a consultation with our Mobile attorneys.