When you pass away, your debts do not automatically disappear. It is important for you and your loved ones to understand what happens to your debts and the steps they can take to ensure a smooth and manageable process. With the help of will and estate lawyers, let’s explore what happens to debts when someone passes away.

Personal Debts

Personal debts, such as credit card balances, loans, and mortgages, are generally the responsibility of your estate. This means that your estate is responsible for settling these debts after your death.

Secured Debts 

Secured debts, such as car loans and mortgages, typically have collateral attached to them. This means that if your estate cannot pay off the debt in full, the lender has the right to seize the collateral. This could include repossession of your car or foreclosure on your home.

Unsecured Debts

Unsecured debts, such as credit card balances and personal loans, are typically not secured by any collateral. These debts usually need to be paid out of your estate's assets before any other distributions are made.

Joint Debts

If you have joint debts with someone else, such as a car loan or a mortgage, the responsibility of those debts passes to the surviving joint account holder. The surviving joint account holder is responsible for making the payments or settling the debts.

Funeral and Medical Expenses

Funeral and medical expenses are typically paid out of your estate's assets before the distribution of other debts. These expenses are considered a priority and should be paid as soon as possible.

Estate Distribution

After settling your debts, any remaining assets in your estate will be distributed according to your wishes and the laws of your state. This may include distributing assets to family members, friends, or charities.

Probate 

Probate is the process of administering your estate after your death. It involves gathering your assets, paying any outstanding debts, and distributing what remains. Probate can be a complex and time-consuming process, and it often involves the involvement of a probate lawyer or probate court.

Seeking Legal Assistance

Dealing with debts after death can be a complex and emotional process. It is important to seek legal assistance from a qualified will and estate lawyer in Chatswood who specialises in estate planning and probate. A lawyer can help you navigate the legal aspects of your debt settlement and ensure that your rights are protected.

In conclusion, your debts do not automatically disappear when you pass away. Your estate is responsible for settling your debts, and the distribution of your assets follows state law. It is important to have a plan in place and to seek legal assistance to ensure a smooth and manageable process for your family.

Whether you are seeking a commercial lawyer in Chatswood for a commercial matter, or advice from a will and estate lawyer for the matters we have discussed in this article, please consider TY Lawyers for all your legal advisory services. To learn more about the will and estate services available to you at TY Lawyers in Chatswood, please contact us here.