Can Your Heirs Ever Be Responsible for a Loan After You Die

[Steve418]

My question involves collection proceedings in the State of: Georgia

If someone dies, can their heirs ever be responsible for the person's debt? If so, what types of debt is this the case for?

[jk]

That’s a very broad question. The answer is yes but it requires the heir to either accept the debt or there was something done within the handling of the estate that would cause the heir to become liable for the debt.

In most situations an heir will not become liable for the decedents debt.

[llworking]

My question involves collection proceedings in the State of: Georgia

If someone dies, can their heirs ever be responsible for the person's debt? If so, what types of debt is this the case for?

The estate of the decedent would be responsible for the decedent's debts. An heir who was also the executor or personal representative of an estate could possible do thing to cause themselves to end up personally liable for debt, but only if they did not follow the laws in administering the estate. An heir who is not the executor could never be responsible to pay someone else's debt, out of their own pocket, unless they actually chose to be responsible.

Anything that passes outside of the estate (life insurance or anything else that passes directly to a beneficiary) is not part of the estate and is therefore not used to pay estate debts.

[doucar]

Perhaps you are thinking about an heir who inherits real property subject to a mortgage. While they are not personally liable to pay the mortgage, if they want to keep the property, they will have to pay it or the lender can foreclose and they will lose it. This is true whether they inherited it through the decedents will or trust, who obtained title as a surviving joint tenant.

[llworking]

Perhaps you are thinking about an heir who inherits real property subject to a mortgage. While they are not personally liable to pay the mortgage, if they want to keep the property, they will have to pay it or the lender can foreclose and they will lose it. This is true whether they inherited it through the decedents will or trust, who obtained title as a surviving joint tenant.

True, the same would also be true of a car with a loan payment or any other property that had a loan payment.

[jk]

True, the same would also be true of a car with a loan payment or any other property that had a loan payment.

Generslly speaking, no, it wouldn’t. With a house, the garn st Germain act provides for the heir to take title of a house and simply continue to make payments on an existing mortgage. With a car there is no such protections and the loan is almost assuredly due on transfer of ownership. While that would not be the heir assuming the debt, none the less the debt must be paid immediately by somebody.

that means generally either the heir buys the car for the remainder of the debt (which is either used as an offset against other assets assigned to that heir or they actually pay cash to the estate) or the estate pays the debt (if it is so directed in a will or required to by law) or the car gets sold by the estate to liquidate it. If the heir was scheduled to receive the car and they could not arrange to pay the debt if the estate was not obligated to do so, they would be due any equity realized from the sale of the car.

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[llworking]

Generslly speaking, no, it wouldn’t. With a house, the garn st Germain act provides for the heir to take title of a house and simply continue to make payments on an existing mortgage. With a car there is no such protections and the loan is almost assuredly due on transfer of ownership. While that would not be the heir assuming the debt, none the less the debt must be paid immediately by somebody.

that means generally either the heir buys the car for the remainder of the debt (which is either used as an offset against other assets assigned to that heir or they actually pay cash to the estate) or the estate pays the debt (if it is so directed in a will or required to by law) or the car gets sold by the estate to liquidate it. If the heir was scheduled to receive the car and they could not arrange to pay the debt if the estate was not obligated to do so, they would be due any equity realized from the sale of the car.

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The point was, was that the debt would have to be paid in order to retain the car...or anything else that had a loan against it. doucar pointed out that unless a mortgage (the debt) was paid on a piece of real estate it could be foreclosed against. I was pointing out that anything else that had a loan against it would have to have the debt paid as well.