If you die owing money to creditors, those debts do survive you, but in most instances your relatives will not be saddled with the responsibility directly. This is the case even if you die without a will. However, the liability can depend on which state you live in.
Debts After Death
Any money that you owe to credit card companies or other creditors is still owed upon your death. It will be paid out of your estate. If you die without a will, your estate will be divided according to your state's laws. But creditors are usually always paid before any relatives inherit your assets. This means that any inheritance will be reduced by the amount of debt that you owe.
Insufficient Estate
If your estate does not contain sufficient assets to take care of all of your debts, the remainder must be forgiven by your creditors. In most instances they cannot pursue your relatives for any unpaid debt that is not taken care of by the estate. However, this general rule is subject to a couple of very specific exceptions.
Cosigners
If your spouse or any other relative cosigned for any of the debt with you, he will remain responsible to pay off the remaining amount. This rule does not apply to authorized users of credit cards whose signature is not on the account contract, but anyone who holds a joint credit card or other joint loan with a deceased spouse will be held liable for a remaining balance.
Community Property States
Nine states operate under community property laws. They are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. If you live in one of these states, your spouse can be held liable for your debt, even if she was not a cosigner when the loan was taken out. In these states a surviving spouse should consult an attorney when dealing with debt after a death.
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