What Happens to Liens & Judgements Against You When You Die?

Liens and judgments are the result of non-payment of debt. Liens are often filed by municipal, local, city or federal offices. The most common liens are tax liens. Judgments are orders to pay debts from the courts. Both of these are negative stains on a credit report. However, after a person dies, the credit report and debt (so long as the credit is individual) die with him.

Contrary to popular belief, the next of kin is not responsible for paying the debts of a deceased family member. The only exception is if the deceased has a co-borrower on any loans. This does happen frequently--especially when it comes to married couples. If the deceased does have assets, though, those assets may be used to recoup the losses.

Co-borrowers are obligated to repay any loans after the other borrower dies. This can wreak financial havoc on an individual. If the deceased was a breadwinner, the survivor may be faced with overwhelming debts to repay. This can cause even further turmoil if the tax liens are attached to a home. The lien-holder has a right to come after the property, evict the homeowner and sell the property to collect on the debt.

A deceased's will can help sort through any remaining debts. While next of kin may not be responsible for the debt, they may not collect all of the assets. Creditors and tax collectors will get the right of first refusal on all assets to collect debts. Therefore, especially if the deceased owns a home, assets will be sold off before the survivors can collect their share.

Creditors may attempt to collect on debts by contacting survivors. This is illegal. Creditors are only allowed to contact borrowers (whether primary or secondary) about debts owed. Not only is this a breach of contract, it is a breach of the privacy on the account.

If the deceased's assets are not enough to recoup the liens and judgments owed, the creditor must write-off the remaining debts as a loss. Creditors cannot come after any other source. This can cause turmoil in the family, though, as family heirlooms may be sold off to collect on debts.