questions & answers

Question: My wife passed away in October and a little while after I received a letter from a collection agency called GC Services saying she owed over 49K to them with the original account being from Educational Credit Mgmt Corp. (student loan)I know Arizona is a community property state but am unsure if I am responsible for her debt. I never signed on any loans and she has no estate to distribute to creditors. Her name was not on the house, cars, or anything. I don't feel like I am responsible for the debt but thought the law might see it differently. I have not contacted the collection agency.

Answer:

AZLawHelp Question 22052:

If a borrower dies, then their federal student loans will be discharged.  If you are a parent PLUS loan borrower, then the loan may be discharged if you die, or if the student on whose behalf you obtained the loan dies. The loan will be discharged if a family member or other representative provides a certified copy of the death certificate to the school (for a Federal Perkins Loan) or to the loan servicer (for a Direct Loan or FFEL Program loan). For more information, contact your loan servicer.

Private loans are completely different because they are like any other consumer debt and attaches to the estate. Generally, private lenders will first attempt to collect a debt from the estate of the borrower. If unsuccessful because there is no estate, they will then look to the co-signer on the loan for repayment. If there is no co-signer then they will turn to the spouse for collecting on the debt.

Either spouse may contract debts and otherwise act for the benefit of the community. In an action on such a debt or obligation the spouses shall be sued jointly and the debt or obligation shall be satisfied: first, from the community property, and second, from the separate property of the spouse contracting the debt or obligation. A.R.S. 25-215.