Rules for Unpaid Bills After Death

When you pass away, someone else takes over your responsibility of paying bills. Depending on the decisions that you made before death, your estate could be handled in one of a few different ways. In many cases, the executor that you choose takes over your estate and pays any outstanding debts.

Probate

Each state has a probate court that assists in the process of settling the estate of a deceased individual. When a person dies with a will, the executor he named will be empowered by the probate court to handle his affairs. If the individual did not have a will, the probate court will appoint an administrator to handle the affairs. The probate court is in charge of making sure that the executor or administrator does his job.

Gathering Bills

Shortly after an individual passes away, the executor or administrator will start to gather bills from the accounts of the deceased. This could include utility bills, credit card payments and loans. When the person dies, the executor typically posts a notice of death in the local newspaper. This way, any creditors can make a claim against the assets of the estate if they are owed money. The executor has a time limit on how long to accept claims on the estate, depending on the laws of the state. Many states have time limits that range between three and six months.

Collecting Assets

Before the executor or administrator can pay the outstanding bills after an individual passes away, he must collect all of the assets from the deceased's estate. This may include transferring money from various accounts into a new estate checking account. It could also include liquidating some assets to generate enough cash to pay the outstanding bills. Once the executor knows how much he must pay in bills, he knows whether liquidating assets is necessary.

Paying the Bills

Once the executor has the assets of the estate, he must begin paying the outstanding bills. The probate court will provide him with information about which debts must be paid first. For example, the secured assets typically must be paid first, such as the auto loans and mortgages. Any unsecured creditors are paid after that. The executor must pay the bills in the proper order, in case there are not enough assets to pay all of the outstanding debts.

References

About the Author

Luke Arthur has been writing professionally since 2004 on a number of different subjects. In addition to writing informative articles, he published a book, "Modern Day Parables," in 2008. Arthur holds a Bachelor of Science in business from Missouri State University.