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Bankruptcy Law Blog

Monday, November 12, 2018

Medical Debt After Death

One of the hardest things to deal with after a loved ones dies is the fact that life goes on without them. Even though they are no longer at your side, you still get telemarketers calling for them, Facebook notifications when they are tagged in a photo, and mail addressed to them. Many widows and widowers even get bills for the end of life care their spouse received addressed to the deceased spouse. It’s like rubbing salt in an open wound, and it is also the source of a lot of anxiety.

Just who is responsible for medical debt that accrued at the end of a loved one’s life? The answer to this question is every lawyer’s favorite answer: it depends. Whether a surviving spouse is responsible for paying for a deceased spouse’s end-of-life medical care depends on how the debt is structured and whether the deceased spouse’s estate has enough money in it to cover all its costs.

Can The Estate Afford To Pay?

When someone dies, all of his or her assets and debts become known as his or her estate (which is where the term estate planning comes from). The estate will be managed by an estate administrator who is either appointed by the courts or named in the deceased person’s will. It is the estate administrator’s responsibility to pay off any debts using funds in the estate. If there is anything left over, the estate administrator then distributes it to the parties named in the deceased person’s will, or if there was no will, close relatives.  

There are many many estates out there that do not have enough money in them to pay off their debts. When this happens, creditors begin to look to surviving relatives for payment.

Who Agreed To Pay?

When trying to determine who is responsible for paying off deceased person’s debt, the first thing to do is check the paperwork. Spouses who co-sign financial documents are generally held responsible for each other’s debts.

However, state law often trumps contracts. Some laws forgive debts incurred by a spouse, while others make it clear that a surviving spouse must pay up. This is why it is important to talk to an experienced attorney before agreeing to take on a loved one’s debt. You don’t want to start paying a debt off, and then be held responsible for it because you have shown you are willing and able to pay.

As an aside, it is important to note that if you live in a community property state all debt is considered joint debt. When one partner dies, the other partner is held responsible for all of the couple’s debt. Alabama is not a community property state, but Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin are.

Bankruptcy Is A Last Resort

If you are being held responsible for a deceased loved one’s debt, and you cannot afford to pay, bankruptcy may be an option. If you qualify for Chapter 7 bankruptcy, most, if not all, of your deceased spouse’s debt will be wiped out.

 


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Padgett and Robertson assist clients with Bankruptcy, Personal Bankruptcy, Consumer Bankruptcy, Chapter 7 Bankruptcy, Chapter 13 Bankruptcy and The New Bankruptcy Law in Mobile, Alabama and throughout southern Alabama. Alabama State Bar Association Regulations require the following: "No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers." 11 U.S.C. 528 of the U.S. Bankruptcy Code requires the following: "We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.”



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Alabama State Bar Association Regulations require the following: "No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers." 11 U.S.C. 528 of the U.S. Bankruptcy Code requires the following: "We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.”