Who Can Pay the Car Loan After Someone Dies?

When you have just lost your spouse, the last thing you want to think about is the bills mounting up with his name on them. However, you must handle those bills for which you are responsible and give the rest to your late spouse's executor to handle to avoid damage to your credit and lawsuits against the estate. Vehicle loans are especially important, because if you or your executor do not pay them, the creditor can repossess the vehicle from the estate.

Joint Ownership

If the deceased person jointly owned the car along with a spouse, child or friend, then that person is solely responsible for continuing to make payments on the car. The surviving owner should contact the lender and inform it of the death as well as make new payment arrangements. If the surviving owner fails to make payments as agreed upon, the lender can repossess her vehicle.

Community Property States

If you live in a community property state, you are liable for all debts incurred during the course of the marriage regardless of whether your name is on the account. Thus, if your spouse bought the car after you were married, you must treat your late spouse's vehicle as if it were a jointly owned vehicle: contact the creditor, make payment arrangements and pay the loan each month. As of 2011, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin are community property states.

Executor

The executor of the estate is responsible for paying most of the deceased person's debts, including secured debts such as automobile loans, if they belong solely to the decedent. The executor should send the lender a notice of estate administration through registered or certified mail. National Paralegal College reports that the creditor may demand full payment immediately. The executor can then pay the debt out of the estate's assets or sell the deceased person's home and use the proceeds to cover the debt.

Repossession

In most states, if a debtor defaults on a car loan, the creditor can repossess the vehicle. This applies equally to the deceased's vehicle if proper arrangements are not made or honored. For example, if a spouse is liable for the payments and does not make them, the vehicle can be repossessed. Thus, it is important to contact the loan holder as soon as possible following the death of a vehicle owner.