After a loved ones dies in California, people may think that all of their debt dies with them. However, this is often not the case. It is important to understand what happens to debt after death.
When loved ones leave debt behind, many people have questions about how they should handle these financial obligations. The Federal Trade Commission says that debt is still considered to be valid after death. Usually, the family of the deceased does not pay this debt. There may be circumstances, though, in which someone is considered to be obligated to repay it. As California is a community property state, people may find that a loved one’s creditors turn to them for repayment. Additionally, co-signers on the deceased’s financial obligations are generally required to pay the debt.
After someone dies, their debt is usually paid out of their estate. According to The Times Herald, creditors typically have about four months to file a claim for repayment of debt. The executor of the will is responsible for notifying these creditors about the death and repaying the debts out of the probate assets. However, the executor generally does not need to repay these debts if a claim is not filed.
Some people may think that they do not need to worry about their debt if they have a will. However, some assets are not managed by a will, and these are the ones which usually go toward the deceased’s debt. These assets can include those which transfer after death and those with a beneficiary.