Late brother's debt

by Dlynn

My brother passed away with an auto loan that is more than the vehicle is worth and significant credit card debt.

His estate is not going to cover everything as it's pretty small, but how do I prioritze who to pay? I want to pay off the funeral expenses and the expenses we are incurring to clean up his home to sell (equity of $15K only) But is there some kind of order to paying this off?

Comments for Late brother's debt

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May 24, 2012
Late brother's debt

Settling the debt is not a bad idea. As for what you can settle for, it's difficult to say because different credit card companies have different policies. Some for example, may be willing to let you settle the debt for 20% of what is owed; some may agree to a better deal.

Understand however, that settling a debt is a matter of negotiation and so a credit card company's first settlement offer is likely to not be as good as you can get if you haggle a little. So if it makes you an offer, make it a counter offer. But, be reasonable. Once you have agreed to a settlement deal, get the terms in writing before you pay the money you've promised to pay.

Good luck!

May 23, 2012
Debt settlement
by: Anonymous

Thank you for your very thorough answer.

Unfortunately, my brother died without a will. And, while everyone has said hire an attorney, we opted to muddle through this ourselves. The attorney we spoke to wanted 5% of all the assets including the valuations of the retirement and pension accounts. Since at last accounting it looks like we will have maybe around $2k after all debt is resolved (that's if we can sell some things to cover it!) It seemed like too much. We wanted to preserve as much money for his daughters as possible.

One of the credit card companies has already offered to settle against a $4K debt. Do you know if that's advisable and how much is a typical settlement percentage?

May 22, 2012
Late brother's debt

So sorry that you have lost your brother. I know these must be difficult days for you.

Here is what happens when someone dies with assets and/or debts. If he wrote a wil, the person he named as his executor goes to the probate court in the county where the deceased resided and initiates the probate process. During this process, all of the deceased's assets are inventoried and the executor pays as many of the deceased's debts as possible, including taxes due, out of the assets. This may require the sale of some of the assets.

If there is not enough money in the deceased's estate (which is all of the assets he owns), any creditors that do not get paid or do not receive everything they're entitled to, are out of luck, unless some of the outstanding debts were joint debts or someone co-signed for the unpaid debts. If there are unpaid joint debts, the creditors can look to the other person/s who incurred the debt for the rest of the money they are due and if any of the debts were co-signed, the creditors can look to the co-signer/s for payment.

If your brother did not write a will, you or someone else must go to the probate court to initiate an administrative process, which will be like the process I just described. The court will appoint an "administrator" to do the same things as an executor.

Once the executor or administrator has paid off as much of his debt as possible (mortgage, car loan and credit cards), any assets that may remain in the estate of the deceased, are distributed either to whomever the deceased left them to in his will or to the legal heirs of the deceased. These individuals are defined by the state.

I strongly advise that your brother's executor, you, or someone else, immediately visit the probate court in the county where your brother resided to begin the probate process. Also, you should know that regardless of how much his estate is worth, a CT estate tax form must be filed on your brother's behalf within a certain time frame. If you need legal help or have additional questions that the probate court cannot answer, I suggest that you schedule a meeting with an estate planning/probate attorney in your area. The initial meeting should not cost a lot and may be free.

I also want to emphasize that neither you nor any of your family members are personally responsible for paying any debts that may not be paid during the probate process, unless as I already explained they are joint debts or debts that one of you co-signed. I mention this because many relatives think that they have a responsibility to do so and some debt collectors will try to pressure the relatives of the deceased to pay his or her unpaid debts by making them believe that it's their obligation to do so. This deceased person’s debt FAQ provides more information on the subject.

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