The death of a family member is a fraught experience for anyone. Adding to this stress is the unpaid inherited debt. Because they need to deal with it in addition to other legal matters. So,one of the major concerns is the question that “Who will pay the Inherited Debt?” Well, the answer is not that simple and may vary depending upon the situation and state type. We have tried to unfold the complexity of inherited debt in Colorado and guide you through everything in this article.
The death of a diseased relative is no doubt, very painful. Because you and your family have to deal with trauma and grief. In addition to this, there are some legal matters that require to be sorted out during the probate of their estate.
The Relatives of Deceased Are Not Liable to Pay Their Inherited Debt
The most common question asked by the surviving families is whether they inherit the debt of their deceased relative. Well, according to Colorado laws, you are not responsible for the debt of your relative who has passed away. So, the debt collectors cannot follow you for their outstanding payments.
However, some states require the children to support their impoverished and diseased parents known often as filial responsibility. In this case, they may need to pay some of the medical expenses after their death. But since Colorado is a state that doesn’t have filial responsibility statute. The residents here are not liable for such type of payments.
You Are Bound to Pay Only If You Co-Signed an Obligation with Them
There is only one situation where you are responsible to pay whatever the inherited debt. That is when you co-sign a credit card or mortgage loan with them. Then after their death, you’ll be responsible for the debt payment.
Who Will Pay the Inherited Debt in Colorado?
No doubt, the creditors cannot ask you to make the debt payments of your dead relative. But that doesn’t mean the debt also died with them. In fact, their estate (if any) will be used and liquidated to pay off what they owe in their lives. Estate of the dead person is the sum of his all assets including bonds, shares, car, property, and other belongings.
The executor or personal representative is bound to notify the creditors immediately after the death of the individual. So that they can update their record and make claims against his estate. Because they can claim their money between 2-6 month period after the debtor’s death. After this period, they can no longer hold the right to do so.
This is where things get a little complex. Because the executor will pay the inherited debt in Colorado by liquidating the estate. And if you are an heir who is expecting to receive inherited property or other assets your share in the inheritance will be less or may even be eliminated completely due to estate liquidation. However, if the value of the estate is lower than the total debt, the inherited debt will likely remain unpaid.
It is important to note that the creditor cannot claim every asset of a dead person for retrieving their payment. There are some exempt assets such as retirement savings and life insurance policies and the creditors cannot go after them.
Additionally, if you inherited a house with a mortgage and don’t want it to be liquidated for making debt payments. There are some options to consider in this situation. For example, you can make a settlement with the mortgage company to pay the mortgage loan yourself.
Bankruptcy of Deceased Family Members in Colorado
If your family member was in the middle of a bankruptcy you should speak with a bankruptcy attorney immediately. Barry Arrington is Denver’s fresh start bankrupcty attorney and handles cases throughout the Denver metro area. Areas include Littleton, Aurora, Centennial, Lakewood, Englewood, Parker and more.
Federal Law Protecting the Surviving Families’ Rights
There is also a legal structure available to help you through the situation. The U.S. Federal Trade Commission have clearly listed the responsibilities and rights of heirs. Moreover, the Fair Debt Collection Practices Act (FDCP) also apply in this case. It protects the surviving families against the harassment from the debt collectors. According to this law, they cannot ask the family member to make the pending debt payments of the dead relative.
This article provides generalized information about the inherited debt in Colorado. In order to get the personalized solution and best legal advice regarding the matter, get in touch with an experienced probation attorney in Colorado.