How do my creditors get their money when I die? Surely they don’t just say “Dang, old mangeorge died, owing us thousamds! Oh, well. Easy come easy go”. So, what do they do?
Peace,
mangeorge. Who ain’t dying just yet. 
Misunderstood question…my answer is off-topic.
They file a claim against your estate. If others are also liable on the debt (because they co-signed, for example), they can seek payment from them. Otherwise, they’re pretty much out of luck.
Ivylass, I thought your answer was okay! 
I know one type of answer to this one- consolidated student loans. Do not, ever, for any reason, consolidate your and your spouse’s student loans. If you do, you will be responsible for the entire amount, forever. Consolidate your own, consolidate your spouse’s, but don’t mingle them- the entire amount becomes yours or his/hers in case of one person’s death.
The administrator or executor of the deceased person has to advertise the fact of the death in the legal section of the newspaper, and creditors assert their claims against the estate. As a practical matter, not many creditors pursue debts after the debtor dies, unless a large estate is left behind and the size of the debt makes it worth pursuing.
Besides which, how many creditors peruse the newspapers to see whether one of their debtors has died? Unless it’s a small-town paper and a small-town creditor, the death probably passes unnoticed until it is too late, legally, for the creditor to pursue its claim.
To extend Gfactor’s answer …
In general … When the estate completes, the debts are paid off. If there IS enough money, the excess goes to the beneficiaries named in the will. If there is NOT enough money, the creditors are paid off according to a priority set in law, and amongst the lowest class of creditors, pro rata.
The creditors have no right to go after the deceased’s family or the will’s beneficiaries if the estate comes up short. Not thay they won’t try, just that they have no legal basis for doing so.
EJ’s point is spot on. You can become liable for a debt that somebody else owes if A) you assume it while they are alive, and B) they die with net debts in excess of net assets.
That’s the only upside to dying, you get to tell your creditors
“Yeah well just try to collect now.”
Thanks. I was in a hurry.
I can think of one or two minor exceptions to this rule, but that’s generally right.
Also, if the debt is secured, the secured creditor will claim the collateral.
And if that person dies, IIRC, the student debt is gone with them, right? At least, that is how it was explained to me regarding the government-backed student loans. They gave the above advise regarding consolidation of the spouse’s loans, but said that once you died, that was it. The agencies were not going to settle the debt with the dead person’s estate.
Yes, that is my understanding- if EJ dies before all of his student loans are paid off (and unless he lives to be 100… 
), the remaining loan balances die with him.
Short story- my grandpa died at home (well, his girlfriend’s house ) while he was alone, and by the time he was discovered and the paramedics called, he was long gone. They still had to transport him to the hospital, where my father specified that no heroic measures were to be tried (the poor man had been dead at least an hour, maybe more).
The hospital ignored this and tried a few things to bring him back- epic fail, of course. The fun part is when they billed us for the “life-saving procedures.” What. The. Fuck?!? We told them that the procedures were unauthorized, and to pound sand. They kept calling and sending letters, until finally a gal in the billing office threatened us with reporting it to my grandpa’s credit report. :eek: I finally lost my temper and basically said “Go right ahead, if it makes you feel better- the man is DEAD, and he was dead BEFORE he got to you! I really don’t think he gives a shit about his credit rating now.”
They went away.
Interesting.
How about life insurance? I’m pretty sure that pays directly to the estate, and would be available to the creditors. Everything else could be “protected”, if one wanted to take the trouble.
What are the exceptions?
Life insurance pays to whoever the policie’s beneficiaries are. My life insurance pays my wife, not my estate. If I had a policy with no named contingent beneficiariy(ies), and my primary beneficiary is dead, then the general rule is that my policy would pay to my estate. But that’s the last-ditch backup procedure where there’s nobody else to pay, not the primary or normal procedure.
That’s right. Forget what I said.
To tack on to what LSLGuy said, one of the uses of life insurance is to cover debts so the estate can pass to heirs unencumbered (or relatively unencumbered; there are always exceptions).
Your question is why estate planning exists as a specialty. There are all sorts of nuances associated with “paying debts after death” that have a number of solutions ranging from life insurance to various kinds of trusts, and so forth, so that assets are passed to those who are meant to receive them, and that creditors (and others who aren’t meant to get them) can be made to go away.
Robin
Spouses and parents are liable for necessaries in some cases. http://estate-law.justanswer.com/deed/19dc8-according-lawyers-paralegal
http://www.fsconline.com/downloads/Papers/2001%2007%20Necessaries.pdf
http://74.125.95.104/search?q=cache:ywJFxwqexAUJ:www.lsnv.org/Necessaries_Doctrine.doc+necessaries+doctrine+family+members&hl=en&ct=clnk&cd=4&gl=us&client=firefox-a
And there are some statutory exceptions. http://apps.co.lucas.oh.us/Courts/Appeals/DecisionsPDF/3469.pdf
As I said, these are exceptions.
Downside #1 - they can’t hear you.
No. They have a service for that which matches all the death and legal notices vs a list, or they sell their list of legal notice names to various creditors.
Now sure, if you owe Chevron $43 on their gas card, it’s too much trouble to file a claim.
They certainly tried to get me to pay my father’s debts when he died.
Them: “According to our records, your father owed our company eight hundred dollars.”
Me: “Dude, you probably knew him better than I did. Good luck with getting paid.”
Never heard from them again.