What Happens To Debt In Probate?

When someone passes away, their assets and debts are typically handled through a process called probate. During probate, a court oversees the distribution of the deceased person's assets to their heirs, and any outstanding debts are settled. In this blog, we'll take a closer look at what happens to debt in probate.

What Is Probate?

Probate is the legal process by which a person's assets are distributed after they pass away.

During probate, a court validates the deceased person's will (if they have one), appoints an executor to manage the estate, identifies and notifies the heirs and creditors, settles any outstanding debts and taxes owed, and distributes the remaining assets to the heirs.

Probate can be a lengthy and complex process, and it can involve a significant amount of paperwork and court appearances.

When someone passes away, their outstanding debts must be settled before their assets can be distributed to their heirs. The first step in settling the deceased person's debts is to identify all of the debts that they owed at the time of their death.

This can include:

Once the debts have been identified, the executor of the estate will work with the creditors to settle the debts. In some cases, the debts may be paid directly from the assets of the estate.

In other cases, the executor may negotiate with the creditors to settle the debts for a reduced amount or set up a payment plan to pay the debts over time.

If the deceased person had more debts than assets, the debts may not be fully paid off during probate. In this case, the remaining debts may be discharged, and the creditors may not be able to collect on the debts.

However, there are some exceptions to this rule. For example, if the deceased person had a co-signer on a loan, the co-signer may be responsible for paying off the debt.

What Happens To Joint Debts In Probate?

If the deceased person had joint debts, such as a joint credit card or a joint mortgage, the other person on the account will typically be responsible for paying off the debt.

For example, if a husband and wife have a joint credit card, and the husband passes away, the wife will be responsible for paying off the remaining balance on the credit card.

In some cases, joint debts may be partially discharged during probate. For example, if the deceased person had a joint credit card with a 10,000 balance, and the other person on the account had only used 5,000 of the credit, the remaining 5,000 may be discharged during probate, and the other person on the account may only be responsible for paying off the 5,000 that they used.

What Happens To Secured Debts In Probate?

If the deceased person had secured debts, such as a mortgage or a car loan, the creditor may be able to foreclose on the property or repossess the vehicle if the debt is not paid off during probate.

In some cases, the heirs may be able to assume the debt and take over the payments to prevent the property from being foreclosed or repossessed.

Conclusion

Probate is the legal process by which a person's assets and debts are distributed after they pass away. During probate, outstanding debts must be settled before the assets can be distributed to the heirs.

The executor of the estate will work with the creditors to settle the debts, and in some cases, the debts may not be fully paid off during probate. If the deceased person had joint debts, the other person on the account may be responsible for paying off the debt.

Smith Clea is a USA-based author on Legal issues related to estate planning, will and trust business law, and elder law. Smith Clea does her best writing on these topics that help users to find the best solutions to their FAQ on estate planning, probate laws, probate lawyers, and more about legal family issues. The author can be reached at https://rochesterlawcenter.com