Does Your Parents’ Debt Become Your Debt?
If your parents have made poor financial choices or have fallen on hard times, they may be accumulating debt without your knowledge. However, upon their death, you will quickly learn the full story of your parents’ finances – especially if creditors begin contacting you for payment.
The fact is that any debt belonging to a deceased person belongs to their estate. So if you parents had debt, creditors can make claims against the estate for payment. In Colorado, creditors have one year from date of death or if a Notice to Creditors is published, 4 months from the date the Notice to Creditors was first published to make claims against an estate after a parent’s death. You may have to sell assets from the estate to pay for these debts; however, in most cases if there are not enough assets in the estate to completely cover the debt, creditors cannot come after you personally to cover the remaining cost of your parents’ debts.
Exceptions to the Parental Debt/Beneficiary Responsibility Rule
Of course, there are exceptions to this rule.
- If you inherit any type of property that is not paid in full (such as a house, car, boat, etc.) you will be responsible for continuing the monthly payments. If you cannot afford the payments, you may choose to sell the property so you do not default on the loans.
- If you have co-signed any type of credit card, loan, mortgage, etc. with your parent, you will be responsible for the remaining debt. Your signature means you assume that risk.
So, in most cases, if your parents’ estate cannot fully cover the costs of their debt, that debt will simply cease to exist. If you are being hounded by creditors, consult with an estate administration lawyer in Denver to make sure their demands for payment are legal.
At The Brown Law Firm LLC, we can help you administer the estate, negotiate with creditors and help protect you from unnecessary legal action. Contact our Denver estate lawyers today to learn more (303) 339-3750 or send us a message online.