My mother, as some of you know, passed away a little over a month ago. We’ve since been working on getting everything together to do the insurance claim and get the will taken care of, but we’re far from near the end of the process. (I am going back to the county she lived in to start the probate next week.)
My mother had a LOT of credit card debt (my aunt (who she lived with for the last few months of her life) says it’s around $20,000). I just got a call from a debt collection agency representing Kohl’s. He made an offer to reduce the $1500 debt by $300 if I paid it now (or on a payment plan). I told him I’d think about it but that my current cash flow probably precluded the possibility.
My question is, is this a legitimate offer, or would this somehow transfer her personal debt (which I’m in no manner personally on the hook for legally, to my knowledge) into my personal debt? In other words, is there any real drawback to just allowing the probate process, including distribution of assets to creditors, to go through?
Also, if the amount of assets in the estate isn’t enough to cover all of her debts, that’s just too bad for the creditors, right? My brother and I would NOT, under any circumstances outside of having cosigned something, be legally responsible for paying the shortfall? And can they attach life insurance benefits?
Based on what I remember from similar threads: they can’t touch life insurance, it’s not an asset(unless she used it as collateral?). You and your brother are not on the hook if the estate is not enough to cover debts. I would check with a lawyer about the offer from Kohl’s but my guess is it would put you on the hook.
Yes, IANAL but… the only claim any creditor would have would be against the estate. Unless the life insurance said “to be added to my estate”, the payout belongs to the beneficiaries, not the estate and so is beyond the reach of creditors.
I have heard this is a common scam - they know they are likely to get diddley-squat, so they try to shame/wheedle/coerce/browbeat the heirs into paying the debt or whatever they think they can get. If your mother owes $20,000, but only $1500 to Kohls, then you end up with her estate still owing $18,500. Unless she has more than $18,800 in assets left, you are no further ahead.
Not sure about the “assuming the debt”. I can pay the debt of any random person walking by me on the street, and unless I sign an offer to pay the whole lot, I am in no way further obligated. But you would then get pestering calls suggesting you pay more…
Check with a lawyer, but I assume any reasonable executor expenses, funeral expenses, etc. come first and will eat up any cash she had before you get around to looking at her debts. Tough bananas to them for loaning money to someone without assets. I guess they’ll just have to raise credt card interest rates on the rest of us… Oh wait…