If you can't take it with you, can creditors come and get it?
If there are two things that are constant in life, they are debt and taxes. And just like the old adage “you can’t take it with you” (meaning the money you have), there may be questions about what happens to a person’s debts after they pass away in the same way that questions arise over how one’s assets will be distributed.
So if a person passes away, will creditors still be able to collect on their debt?
The answer to this question is, it depends. Indeed, a creditor may pursue a claim through a person’s estate. After all, this is what the probate process allows for as part of the orderly process of passing legal custody of assets from the deceased to his or her heirs.
Of course, if a person passes with a great deal of cash and assets, a judgment may be satisfied by paying it from the proceeds of the estate. One thing to remember, creditors have significant powers under law to collect on debts formerly generated by the deceased.
So as an executor of an estate, you may be confronted by a lawsuit from a former creditor to the deceased over unpaid mortgage payments, utility bills or credit card payments. If this occurs, it is important to contact an experienced probate attorney so that they claims can be duly verified and defended as appropriate. After all, some unscrupulous creditors may try to exploit the probate process and collect on debts that are no longer valid.
The preceding is not legal advice.