Am I Responsible For My Parents’ Debt? Depends

3 min read

responsible for parents debt

Discussion surrounding finances are never commonplace when it comes to families. Parents usually have a good idea of their children’s finances, but children often never have a clue how their parents are doing financially. Financial Issues and situations are usually uncovered once a parent passes away. Unfortunately, this puts a lot of children in distress, wondering who is responsible for the parents’ debt they leave behind. The good news is, it’s are typically not transferable to children.

Losing a loved one is never easy, and talking about it is never comfortable. Not only do you have to deal with the emotional stress, but they are Financial stresses as well.

In this article, we will explore the financial obligations parents debts on children and answer the question “Am I responsible for my parents’ debt?”

Am I responsible for my living parents’ debt?

No, you are typically not responsible for your living parents’ debt. This is only true if your signature is not on any of the accounts. If you co-signed or co-borrowed any debts with your parents, then you will also be liable for paying them off.

This is an important distinction to make. Debt collectors can often practice illegal methods of contacting children of parents who are in debt. If that is the case and it’s happening to you, you’re not obligated to pay anything. Again, this depends on whether you co-sign for that. If that’s the case, then you will be equally liable to pay it off.

Can I inherit my parents’ debt upon death?

In most cases, children do not inherit their parents’ debt upon death. However, if you co-signed or co-borrowed this debt with your parents, then you would be 100% liable for the debt as well. Just remember that, if your signature is anywhere on the debts, then you might be liable.

If the debts are also in your name, then there is unfortunately very little you can do. When you are a joint owner of the debt or a co-borrower, all the liability falls upon you upon their death. If that is the case, you might be able to contact them to figure out some sort of payment plan. It’s also now equally important to figure out some kind of budget and manage your finances so you can pay it off.

What happens to my parents’ debt upon death?

Upon your parents’ death, their outstanding debts are handled based on what kind of depth they are. There are basically two kinds of debts. Secured debt and unsecured debts. Remember, you will not be personally liable for these debts if you are not a co-borrower or co-signer. Make sure to check the documentation for your signature.

Secured debts

Secured debts are debts that are backed up by physical assets. Examples of secured debts are mortgages, car loans, title loans, etc. Basically, any debts that can be foreclosed on or repossessed are secured. Your parents’ debts are secured, then this means creditors will be coming after the assets they are secured against.

If your patents died without paying off their cars, then the car will be repossessed. If they haven’t paid off their mortgage, then the home will be foreclosed on. Of course, children can take over these debts to prevent this from happening. This is completely up to you. Regardless, Banks and creditors will want to make their money back. They will be lawfully entitled to these assets to pay back the debts.

Unsecured debts

Unsecured debts are not backed up by any asset. Examples of unsecured debts are credit cards, unsecured personal loans, and payday loans. This means that if a debtor fails to pay back these loans, it becomes a loss of the Creditor.

If your parents die without paying back these unsecured debts, then there is nothing a creditor can do. They cannot come after the assets they have left behind since the debts were not secured. There have been cases where debt collectors would try to come after the children to recover the debts. Remember, if the debts are unsecured, then there is nothing they can take.

Can I inherit my parents’ medical bills upon death?

Depending on the state you live in, you may be responsible for your parents’ medical bills upon death. About 30 States have laws in place that require adult children to repay any unpaid medical parents that their parents couldn’t cover. These laws are called filial responsibility laws.

Although not all states have these laws in place, they also have been cases where hospitals and nursing homes would sue adults children for the unpaid medical expenses. Make sure to always be prepared in case something like that happens.

States that have filial responsibility laws

If you live in one of these states, then you may be one hundred percent responsible for paying your parents’ medical bills upon their deaths

ConnecticutMississippiRhode Island
DelawareMontanaSouth Dakota
IdahoNew HampshireUtah
IndianaNew JerseyVermont
IowaNorth CarolinaVirginia
KentuckyNorth DakotaWest Virginia
States that have filial laws in place

Final thoughts

In conclusion, if you’re wondering weather you are responsible for your parent’s debts will depend on a few things. First, you will need to determine how the debts were written up. If you signed on these debts and your signature is on them, chances are that you will be responsible for them.

On the other hand, if you did not sign for them but live in one of the filial states listed above, then you will need to read up on your local state laws to determine what you will be responsible for. Always consult your local professional for solid advice!

Good luck! 🙂

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2 Replies to “Am I Responsible For My Parents’ Debt? Depends”

  1. I ran across the issue of filial responsibility laws, very crazy. I get the impression that it is pretty rare for medical providers to actually use those to go after the children of deceased individuals but there were some documented cases of that happening. We did have to pay medical bills for months after my parents had passed away due to the delays in our medical billing system. It wasn’t a problem because they had left my brother and I seven figure inheritances and the bills were only a few hundred dollars but it seemed like they would never stop coming.

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