It is an occurrence that happens more often than not – a person passes away and leaves unpaid debts behind. For the next of kin that is left behind, they often wonder what happens with these obligations. This often depends on the type of debt and certain laws.
The estate of a deceased person, being the financial accounts, possessions, real estate – this is where creditors will try to reclaim debt owed to them. Depending on the assets left and the debt owing will determine how this is repaid or not paid
In order to pay off any unpaid debts, the executor will need to obtain probate to enable them to close off accounts, then to make payment of debts and then distribute to the beneficiaries. There are instances where there isn’t enough in the estate to payout the debts. Depending on the Debt, the Executor may be able to negotiate to write off the debt or have to work out a way to pay the debt.
In some cases, debts may not need to be repaid if the debt is unsecured and there isn’t enough money in the estate to pay it off. A creditor or lender cannot request that family members pay the reminder of debts unless:
- They have an asset which has been used as security for a loan.
- They are a joint borrower, or
- They have guaranteed your loan
The executor of the estate is responsible for ascertaining what is in the estate and what debts are owing and how these can be repaid.
Taylor and Scott’s offer to you
Taylor & Scott’s cost-effective and competitive Wills & Estates services can help you navigate the complicated processes that surround probates. Our experienced team are always across changes and able to advise you on the most up-to-date information.
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