Some Tyler residents struggle with debt for most of their lives. Some may even pass away with significant debt, especially in the case of medical bills incurred late in life. The prospect leaves many wondering what happens to one's debt after death.
Unfortunately, debt does not die along with the debtor. Creditors' rights to collect the money owed to them extend to a deceased borrower's estate. The executor of the estate will be responsible for paying any debts by using the assets in the estate. That includes any cash available, and potentially selling off valuable items or properties if more funds are needed to cover the debts.
If there is debt left over after the estate has exhausted its ability to pay, a few different things can happen. As a community property state, Texas law states that debts taken on within the course of a marriage are shared by both spouses. Therefore, a surviving spouse could be on the hook for the deceased spouse's debt, assuming the debt was incurred during the marriage and wasn't specifically kept separate. If someone cosigned on a loan for a Tyler resident, the cosigner may also be accountable for any lingering balance on that loan that the estate couldn't afford to pay.
It is out of an abundance of concern for one's spouse and heirs that many will research the possibility of filing for bankruptcy later in life. Bankruptcy discharges unsecured debts like credit cards and medical bills. Resolving these issues through bankruptcy can help protect one's estate and avoid exposing loved ones to debt collection efforts.
In fact, other types of debt can further complicate the situation after death, such as if the deceased had a home equity loan or private student loans. Therefore, it is important to understand the degree to which creditors might be able to come after one's spouse or heirs, and whether bankruptcy could help.