What Happens To Our Debt Once We Die?

When we have debts and we pass away, those debts are not automatically cleared or automatically passed on to another person, in Florida. Instead, under Florida law, the debt becomes the responsibility of the estate of the deceased debtor. The estate of the deceased debtor is different from the debtor himself or herself and different from anyone else associated with the debtor. It’s a separate legal entity. The probate code sets forth certain notice opportunities where creditors need to be advised about the debt. This affords timelines for when a debt should be settled.

The probate court tells us when debts will no longer be valid and enforceable against any entity. The probate process is where debts and responsibility for debts are determined. The main exception to this rule is if there is another person on the debt, such as a cosigner. In this case, the person who obligated him or herself to the deceased person’s debt will still have to pay the debt.

The other avenue creditors can utilize to collect debts outside of probate court is when creditors have cross-collateralization agreements. There could be an agreement between the debtor and the lender, saying that if they don’t pay the debt, the creditor is allowed to replenish from another account automatically. This typically appears when someone gets a credit card with the credit union where they also have a checking account. The credit union, upon notification of debt, may satisfy the credit card debt using the funds in your checking account that they also hold.

Am I Responsible For My Spouse’s Debt?

Typically, you’re not responsible for your spouse’s debt when the debt is in the name of your spouse only. If a husband takes out credit cards without his wife, when he dies, his wife would not be responsible for paying that debt. Instead, the creditor would have to go through the estate of the deceased spouse. If you are the sole surviving spouse and beneficiary of your deceased spouse’s estate and there is an estate debt, then that debt must be handled through the estate process before you receive any inheritance from your spouse. You can be indirectly responsible for your deceased spouse’s debts if those debts must be paid through the probate process. If there is no probate process and you’re not a joint signer on the debt, then your personal assets held in your name are not going to be subject to the creditor claim.

How Do Courts Generally Resolve A Deceased Person’s Debts?

When someone passes away, creditors must be given notice. Known creditors must be given actual notice of the death. This is done using certified mail or other types of mail where you can get a receipt and proof that the creditor has received it. Unknown creditors are handled a different way. Unknown creditors are people who may have potential claims that the personal representative may not even know about. That process is handled by publishing notice in the newspaper.

Once proper notice is given to creditors, there is a deadline for the creditors to submit their claims to the probate court for payment from the estate. The personal representative of the estate would review each of these claims and determine if the claims are valid for payment. If the claim does not appear valid, the personal representative has the right to object to the claim and if there’s an objection to the claim, the creditor then must file a lawsuit against the estate within 30 days of the date of receipt of that objection. If the creditor does not file a lawsuit against the estate within this time limit or subject to extension of the timeline, then the creditors does not have to be paid.

The process of publication and notice takes four months from the date of publication and will need to pan out before any kind of estate assets are distributed to the beneficiaries. If the personal representative in charge of the estate pays out the beneficiaries without having first satisfied the creditor claims, then the personal representative is going to have to come up with the money from his or her own funds to pay off the creditors.

For more information on Debts Of A Deceased Person In Florida, an initial consultation is your next best step. Get the information and legal answers you’re seeking by calling (904) 398-6100 today.

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