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Am I Liable for My Deceased Spouse's Debts?

My wife died with $17K in debt. Am I liable? Can the credit card company put a lien on my house for the debt?

We live in Alabama. My wife died with about $17,000 in credit card debt -- all in her name. She also has a car loan in her name only which she purchased credit insurance on. We own a home with some equity but not much. What could I expect from the credit card companies? Would they put a lien on our house? Could they force a sale? Would they come after a fairly new paid off car in her name? What could I expect if I don't assume her credit card debt?

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Bill's Answer
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Updated: Oct 21, 2014

Collections
Highlights

  • A deceased person's debts do not disappear automatically.
  • However, family members are not responsible for a decedent's debts either.
  • The probate process will resolve creditors' claims.

My condolences on your loss. If you remember anything I am about to write, please let it be this: Do not believe legal advice from collection agents. The legal advice collection agents offer is usually incomplete or wrong, as is always self-serving.

Deceased Spouse’s Debt

Some people assume a decedent’s debt is forgiven or possibly written off by creditors. The law does not work that way, with the exception of federal student loans. However, spouses or other relatives are not responsible for the decedent’s debt automatically, either. Many collection agents take advantage of a debtor’s grief and ignorance of the law to imply the family must pay the decedent’s debt, but that may not be the case.

When a person dies with a will, the will controls the financial affairs of the decedent’s assets, which is called the “estate.” A will distributes assets, not debts. However, before any assets can be distributed to the heirs, all known debts must be paid by the executor. Therefore, the executor will sell assets in the estate to pay for any debts that remain. Only after the debts are paid will the remaining assets be distributed among the beneficiaries of the will. The process I just described is called , and a lawyer experienced in probate law can guide you through the process.

If a person dies without a will, this is known as “dying intestate” in lawyer-speak. In this situation, the court appoints an administrator to handle the distribution of the decedent’s assets according to the laws of the state. As with dying with a will, assets are distributed after debts are paid. Again, a lawyer experienced in can guide you through this process.

Here is a key point: If the estate is insolvent the creditor has no legal right to collect the debt from family members, children, or friends. In most states, the creditor cannot collect from the spouse either. However, in community property states, the question becomes more complicated.

Community Property States
Source: Bills.com
Alaska*
Idaho
New Mexico
* Optional

Deceased Spouse’s Debt in Community Property States

Generally in community property states, debt incurred by a spouse for the benefit of the family is considered a “community” debt, and therefore the spouse is responsible for repaying that debt.

Does medical debt benefit the community? At first glance, no it does not. However, no two community property states use exactly the same laws. You may or may not have liability for your deceased spouse’s debt based on your state’s community property laws. But you cannot stop your analysis here regardless of which state you live in..

Doctrine of Necessaries

Many, but not all states have a “doctrine of necessaries” rule. The doctrine on necessaries rule requires spouses to pay for each other’s necessities of life. The doctrine also applies to parents of minor children.

If your state has a doctrine of necessaries rule for spousal debt, you may have liability for your spouse’s medical debt, even if you were completely unaware of the expense. See the Bills.com article to learn the rules for your state.

Your Questions

You mentioned Alabama. Alabama is not a community property state, so my discussion about community property law does not apply to you if you reside in Alabama.

Alabama repealed the doctrine of necessaries. Therefore, there is no statutory requirement you pay for your spouse’s necessary medical expenses if you did not sign a contract saying you would.

You did not mention whether your wife died with a will. I will assume she died intestate (without a valid will). In a process called probate, the administrator will review all of your wife’s assets and debts. You mentioned she had “credit insurance” on the vehicle, which I will infer means the balance of the car loan was paid when your wife passed away. The vehicle is an asset in her estate, unless your wife had your name on the title with hers. If your name is on the vehicle’s title, the vehicle became yours upon her passing.

For the sake of argument, let us assume her name was on the vehicle title alone. Let us also assume she had no other assets. And finally, let us assume the fair market value of the vehicle is $17,000. If that is the case, the administrator will sell the car, and pay the credit card company the balance owed, leaving you and her other heirs nothing. However, if the vehicle is worth more than the balance on the credit card account, then the remainder after paying off her debts will be distributed to your wife’s heirs. On the other hand, if your wife’s vehicle is worth less than $17,000, the administrator will sell it, give the proceeds of the sale to the creditor, and look elsewhere in your wife’s estate for the balance.

Spousal Debt and Real Estate

I am concerned about the title of your home. You used the phrase “We own a home...” This implies both of your names are on the title.

The exact language used in conjunction with the names on the title is extremely important. If the language on the title is “John Doe and Jane Doe, as joint tenants” or “John Doe and Jane Doe, as joint tenants with right of survivorship” then your spouse’s interest in the property passed to you at the moment of death automatically.

Similarly, if the phrasing of the title is something like, “John Doe and Jane Doe, with a tenancy by the entirety” then your spouse’s interest in the property passed to you at the moment of death automatically.

With either a joint tenancy or a tenancy in the entirety, because your spouse’s interest passed to you without going through the probate process, the house is not an asset of your spouse’s estate. That means that the creditor’s have no legal means of stating any claim against your house — there is no way for them to attach a lien to the house.

On the other hand, if the phrasing used on the title to the house is something like, “John Doe and Jane Doe as tenants in common,” then we have a more complicated situation.

Tenancy in Common

In a tenancy in common, each person on the title has an undivided interest in the property. Each person can dispose of their share of the property without it affecting the ownership rights of others. Unlike a joint tenancy or a tenancy in the entirety, upon death the decedent’s interest does not flow to the other owners instantly. Instead, the interest is considered an asset of the estate, and is distributed according to the decedent’s will or the state’s intestate distribution rules.

In this case, if the house was titled as a tenancy in common, you would retain your interest, then as spouse receive one-half of her interest. Her remaining interest would proceed through probate. If estate was debt-free, the remaining interest would be distributed to her other heirs, such as any children she may have had.

If the house was titled as a tenancy in common, and your spouse’s estate had outstanding debt, then it is within the administrator’s power to sell the interest to raise funds to satisfy the debt.

As you may have gathered, the rules regarding how a property may be titled are intricate (they are almost universally hated among law students, too, but I digress.) For that reason, I recommend you take the documents regarding your spouse’s vehicle loan, her recent credit card statement, the title to your property, and any other documents that you think may be important regarding her finances to an Alabama attorney experienced in property or probate law. He or she will review the entire situation and give you a more detailed and precise discussion of your rights and liabilities.

Summary

Do not assume you have liability for your deceased spouse’s debt. For additional general information on who is responsible for deceased person’s debts, see the Federal Trade Commission documents and . Both documents are excellent starting points for family members dealing with this issue. Second, to learn more specific information about your state’s probate rules, consult with a lawyer in your state experienced in probate law.

I hope this information helps you Find. Learn & Save.

Best,

Bill

46 Comments

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  • SC
    Oct, 2012
    Sam
    Mom died. She was on the deed to the house but not the mortgage. Her (estranged) husband is claiming there is a lien on the house for student loans she didnt pay and that he was unaware of. He cant sell or refinance. To my knowledge there is no will. Is he liable? He wants to dispute it saying their relationship hadnt begun at the time she withdrew the student loans. ---Daughter, NY
    0 Votes

    • BA
      Oct, 2012
      Bill
      Impossible to answer your question without knowing:
      • The state where the property is situated, and
      • How the property was titled (joint tenancy, tenancy in common, tenancy in the entirety, or community property)

      Perhaps I lack imagination, but I fail to see what difference it makes if the student loan debt was pre-marital or incurred during the marriage. The issue is the lien was placed on property the debtor owned while she was alive. Depending on the state's laws and the property's title, the lien either remains in full effect or ceased when judgment-debtor died.

      The surviving spouse should consult with a lawyer who has probate or property law experience to learn his rights and liabilities. Yes, a lawyer's time is not cheap, but if the circumstances are such that the lien is not longer effective, the lawyer's hourly fee will be money well spent.

      0 Votes

  • CL
    May, 2012
    Cindy
    My mother pass away this year. There as no estate she had 5 credit card under her name only had less then $10,000 on them. My Father went to in lawyer in Florida. The lawyer told him that Florida is not a Non community property state. Three of my mother credit card company has turn later or no payment over to my father credit report. What do I tell do now?????
    0 Votes

    • BA
      May, 2012
      Bill
      Your statement, "There is no estate..." is not quite correct because you went on to say, "she had 5 credit card under her name only (and) less than $10,000 on them." The general rule is, if a deceased person has any assets or liabilities, the decedent has an estate.

      What may be true is the decedent's family may not need to probate the estate. You mentioned Florida. Consult with a Florida lawyer to learn what, if any, steps your family needs to take to notify the decedent's creditors about their share (if any) of the estate.

      Regardless of your mother living or not, it is inaccurate for the original creditor or collection agent to place one spouses debts on another's credit report in common law states. My advice?
      1. As I mentioned earlier, consult with a probate lawyer.
      2. File a dispute with each of the three credit reporting agencies that are publishing the erroneous information.
      0 Votes

  • JW
    Mar, 2012
    Julie
    My husband passed away in December leaving behind unpaid medical bills (of which I was unaware). His assets were CDs and bank accts. that listed me as beneficiary. These I transferred into my accounts. Sometime in late January the hospital and his doctor began sending me statements listing me as "financially responsible". A short while later I began getting calls from collection agencies demanding payment for medical bills I had no knowledge of. As an Oregon resident it was my understanding, since I didn't sign any agreements with the doctors or hospital, that I was not responsible for these debts. Am I correct?
    0 Votes

    • BA
      Mar, 2012
      Bill
      You must probate your deceased spouse's estate. Consult with a lawyer who has probate experience to begin this process. Your probate lawyer will instruct you in how to handle the calls from creditors.
      0 Votes

  • NM
    Mar, 2012
    nicole
    My mother passed away January of 2012 in Ohio, she has been married to my father for 48 years. She bought their first home January of 2011, due to my father having a social phobia he didn't go with her to be put on the deed to the home and she did not have a will. I know we must go through probate. My question is, since my mother does have old bills against her, will my father lose their home? Her name was the only name on the deed and she had left no will.
    0 Votes

    • BA
      Mar, 2012
      Bill
      My short answer is, "probably not." You mentioned Ohio, which is a common law family law state. This is a bit of an oversimplification, but in common law states, separate debt stays separate, and a spouse is not responsible for a deceased spouse's debts. Again, that's a general rule, and there are exceptions. Try to convince your father to consult with a probate lawyer, who can guide him through the process of tallying all of the debts and assets, and notifying creditors of their share (if any) of the assets.
      0 Votes

  • CR
    Feb, 2012
    Chris
    My mother recently passed away. She had a will leaving everything to my father. The only asset she had in her name was a 1999 car with little value. She also owed balances on 2 credit cards that were in her name only. My father has been contacted a couple of times in the past week by a collection agency for one of them. Both times he was told that he was not responsible for her debt but they wanted the name of the person responsible for handling the paying off of her debts. Since she didn't have an estate to speak of as they owned everything but the car together, does he have any responsibility to pay the credit cards?
    0 Votes

    • BA
      Feb, 2012
      Bill
      The answer to your question is, "No, your father most likely has no liability for his deceased spouse's separate credit card debt." However, your father should consult with a lawyer in his state who has probate experience to learn a more precise answer than the one I just offered.
      0 Votes