What Happens If Someone Dies and There Isn’t Enough Money To Pay Their Debts?

  • Estate Planning
What Happens If Someone Dies and There Isn't Enough Money To Pay Their Debts?

Someone’s debts do not simply disappear when they die. After someone dies, any debts they owe are paid by the deceased person’s estate. But what happens if there isn’t enough money in the estate to cover the debts? In Illinois, the deceased person’s family is not responsible for their debt – but their estate is. If there is not enough money in the estate to pay the deceased’s debts, the debts go unpaid.

If a family member dies and is in debt, and you did not co-sign for this debt, debt collectors are not allowed to call you to demand payment. If there isn’t enough money in the deceased person’s estate to cover the debts, the debts usually go unpaid. According to the Fair Debt Collection Practices Act (FDCPA) says,

“family members typically are not obligated to pay the debts of a deceased relative from their own assets. What’s more, family members – and all consumers – are protected by the federal Fair Debt Collection Practices Act (FDCPA), which prohibits debt collectors from using abusive, unfair, or deceptive practices to try to collect a debt.”

In Illinois, you can be held personally responsible for a deceased spouse or parents’ debt if you:

  • Co-signed or guaranteed a loan or line of credit for them
  • Co-signed a credit card for them
  • Jointly own property
  • If a parent’s assets are transferred to their child shortly before their death to avoid paying debts
  • Mismanagement of a parent’s estate

But in general, spouses and children are not responsible for a deceased person’s medical bills and other debts if the estate cannot cover the debt.

Do You Have Questions About A Family Member’s Debt?

Meeting with a Probate, Trust, & Estates attorney can help you understand and manage any debt in their estate. To talk to an estate and probate attorney, contact the Estate & Probate Legal Group in Lombard Illinois at (630)-864-5835.

AREAS WE SERVE: Cook, DuPage, Kane, Lake, and Will counties