How to Pay the Debt of a Deceased Person

The heirs of a deceased person are not obligated to pay the recently departed individual's debts, but the estate left behind is beholden to creditors. After the estate pays for funeral expenses, any existing creditors have a right to divide up the assets of the estate to cover any existing accounts. Once these debts have been settled, the rest of the will can be executed.

Instructions

1

Determine who the executor or administrator of the deceased is. The executor will be named by the will of the deceased. If there is no will, the next of kin will need to appoint one. The executor is given legal and fiduciary responsibility for the estate and all its debts.

2

Report the death to all creditors of the estate if you are the executor. Even if the estate has no means to pay back the debts, the executor is still legally obligated to do so. This will not stop collection attempts, but may open up opportunities to settle the debts for less than the full amount owed.

3

Pay debts to the federal government first followed by state and local governments. The estate must pay the government first before settling other debts. Once those are settled, the order in which other debts are paid at the executor's discretion.

4

Consider contacting an estate lawyer to assist in settling the estate. Settling the debts of an estate without any expertise can open the executor up to lawsuits from heirs concerned that the estate was not managed responsibly.

5

Continue paying debts until they have all been discharged or until exhausting all assets of the estate. Once this occurs, any remaining assets may be distributed to heirs as per the stipulations of the will. An estate cannot declare bankruptcy.