Dealing with Debt

questions & answers

Question: When a person passes away are the outstanging debts,like credit cards passed on to their adult children?

Answer: If the adult children are not listed on the credit card or as a co-signor on a note, for instance, along with the parent, the children will not be responsible for the parent’s debt after the parent’s death. When the parent dies, as part of the probate process, creditors are notified by the personal representative of the estate to submit outstanding claims to the estate of the person who died (called the decedent). The debts are prioritized and if they are secured by property, such as a mortgage or car loan, they have higher priority over unsecured debts, such as medical bills. The creditors are paid off by the funds in the estate, with the secured debtors being paid first generally. The unsecured debtors are paid last and if there are no funds remaining, they do not get paid and the debts are written off by the company as losses.

For information on the small estate probate process, called small estate administration, you can visit the Maricopa Superior Court Self-Service Center for forms and instructions. Be aware that there are various requirements that the estate must meet related to the total value of the estate, in order to be able to avoid probate and use this process. Carefully read the rules before proceeding in this manner.