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My Mom died with a huge debt. What should I do, pay off and ignore?

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    My Mom died with a huge debt. What should I do, pay off and ignore?

    My father died about 10 years ago and about a month ago, my mom also passed away. She has left behind a huge burden of debt. Being emotionally stirred up, I feel its my responsibility to pay it off. However, I am single mom with 3 kids. I don't have the financial capacity to shoulder the burden. I am in dilemma as to what to do. Please help me to arrive at a good decision.

    #2
    Welcome to the site. Very sorry for your loss.

    As for the debt, as Dave Ramsey is fond of saying, when you die, what you own stands for what you owe. So in settling her estate, you will use some of her assets to settle her debts. For example, if she owned a home and still had a mortgage, when you sell the house, the proceeds will go to pay off the mortgage and you and any other heirs will get what remains.

    Beyond that, however, you are not personally responsible for her debts unless you were jointly involved in them such as co-signing a loan. Otherwise, her debts were her debts, not yours.
    Steve

    * Despite the high cost of living, it remains very popular.
    * Why should I pay for my daughter's education when she already knows everything?
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      #3
      Note there is an order to debt claims against a decedent's estate. Taxes get paid first, other debts get paid later, if there is money left. Creditors lower in the order, such as credit cards, will often settle for 10% of what is owed. Creditors who settle for less than the amount owed may then send a "Cancellation of Debt" notice to the IRS, which is treated like taxable income to the estate, and that can cause the estate to owe taxes the following tax year.

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        #4
        Very tough to have to figure this all out, I know, Stacy. I want to make sure you understand that your mother's debts are not your debts. You do not owe or need to pay her debts with your personal money. Debts are not inherited.
        "There is some ontological doubt as to whether it may even be possible in principle to nail down these things in the universe we're given to study." --text msg from my kid

        "It is easier to build strong children than to repair broken men." --Frederick Douglass

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          #5
          Thanks for supporting and helping me

          Thanks a lot for extending a hand of support. I understand that its not my responsibility to pay off my mom's debt. By selling her home, a portion of her debt might get paid off. That's all that can be done and perhaps, needs to be done.
          A big thank you once again.

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            #6
            Her estate maybe the home equity might cover everything.
            LivingAlmostLarge Blog

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              #7
              Originally posted by Joan.of.the.Arch View Post
              Very tough to have to figure this all out, I know, Stacy. I want to make sure you understand that your mother's debts are not your debts. You do not owe or need to pay her debts with your personal money. Debts are not inherited.
              They are and they aren't. To the extent there is an estate from the deceased to place a lien against to satisfy outstanding debit, they are inherited. If the proceeds from the estate are exhausted and there is still debt, it is likely that the remainder of the debt does not convey to the heirs, unless there are situations of co-assignment of debt, guarantor, etc., which do occur fairly frequently.

              However, if the deceased owed $200,000, and the value of the estate is $200,000, it isn't reasonable to expect that the heirs to the estate only pay part of the debt and keep the remainder of the estate to themselves. The creditors will have something to say about that.

              Just wanted to clarify.
              Last edited by TexasHusker; 08-08-2017, 08:14 AM.
              Never underestimate the power of stupid people in large groups.

              -George Carlin

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                #8
                Children are not obliged to pay debts left by parents but the deceased personís estate executor is. Debts are not wiped out by death unless there is no money in the estate to pay them off. If there is not enough money to pay off all debts then they are normally paid pro-rata following discussions with the creditors. Debts are paid off before the estate is distributed to heirs.

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                  #9
                  Originally posted by colby99 View Post
                  Children are not obliged to pay debts left by parents but the deceased personís estate executor is.
                  That strongly implies that the executor must pony up cash from his own pocket, and that's not true. He is obliged to mails checks from the estate's checking account, first to the creditors, and then to the heirs.

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                    #10
                    Originally posted by StacyMontes View Post
                    My father died about 10 years ago and about a month ago, my mom also passed away. She has left behind a huge burden of debt. Being emotionally stirred up, I feel its my responsibility to pay it off. However, I am single mom with 3 kids. I don't have the financial capacity to shoulder the burden. I am in dilemma as to what to do. Please help me to arrive at a good decision.
                    Hi Stacy, so sorry for your loss. I wish I had seen this message earlier. I was in a similar situation 3 1/2 years ago. First, I would advise you to visit an attorney, even for a free consultation. Bring any financial paperwork you have and copy of the will and other estate documents. You need to learn what assets are subject to creditors, and which are not. After that, you will need to get a picture of her financial status. How much debt on the house vs. the worth? Any other outstanding debts- credit cards, utilities, medical bills, automobile, insurance, etc.? In my situation, there was no point in pursing probate because Mom's debt vs. assets was about even. So I let her home go into foreclosure and did not pay any outstanding bills.

                    Please be careful not to talk to creditors by phone. You do not want to accidentally say anything that they might be able to construe as you are taking responsibility for the debt. Ask for correspondence in writing.

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