No one ever wants to deal with a pile of bills, much less after the death of a loved one. Yet, this is often what happens.
Experts say that bills do not stop after someone’s death. The deceased’s mortgage or rent, utilities, taxes, loan payments and final credit card and medical bills, among other things, will continue to accrue. This can feel overwhelming, on top of your own outstanding bills and while you’re adjusting to life without a loved one.
Experts said, don’t worry. Many bills do not have to be paid immediately, he said, some will be negotiated and others will never have to be paid.
“We’re all about paying bills on time or early and paying back the amounts you send us,” said Delaney Haley, certified trust and fiduciary advisor and head of client operations and experience at estate settlement platform Alix. “It’s ingrained in us. When someone dies, it’s very hard not to pay all the bills, but there’s a time to pay and then, there’s a chance to negotiate.”
None of these times are immediately after someone dies or when you receive a bill, he said.
What should people do when the bills start arriving?
If you “need to keep the power on at home, it’s a little different,” Haley said. The mortgage, taxes, insurance and utilities related to the property must continue to be paid. If you pay them, keep receipts and records because you can get reimbursed when the estate is settled, she said.
Other bills, he said, such as final hospital and other medical bills and credit card bills, should be collected and set aside for later. Even if aggressive debt collectors approach you and threaten you into paying, experts say, resist.
According to the Consumer Financial Protection Bureau (CFPB), you are never personally responsible for paying a deceased person’s debt from his or her estate unless you are a joint account holder or co-signer on the loan, or live in a state that requires the surviving spouse to be responsible.
“The hardest thing is to wait, take a deep breath and take inventory,” said Chase McLeod, founder of commercial real estate brokerage McLeod & Co., who has gone through the process with family and friends. “You first have to look at what the liquidity is compared to outstanding bills. Then, there is a strict order of operations with payments being made first.”
If low-priority debts such as credit cards have been paid off and there is not enough money to pay higher-priority claims such as funeral expenses later, the executor or family could be held personally liable for the shortfall, experts said.
what is the procedure?
When someone dies, experts say to follow these steps:
- Determine the estate representative. Someone’s name will probably be written in a person’s will. If there is no will, petition the probate court to name one.
- The estate representative will notify known creditors and heirs and publish a public notice in a local newspaper to alert unknown creditors of the person’s death. State laws dictate how long a notice must be published or how long creditors have to respond, Haley said. Once creditors receive notice of death, fees or interest cannot be collected, he said.
- Creditors who do not respond in writing by the deadline will not get paid, he said – another reason for not paying bills promptly.
- Be cautious of scams during this time. Debt collectors are required to provide specific information about the debt, usually in writing, during their first communication with you or within five days of the first communication, the CFPB said. “If the collector refuses to give you any information about the debt – even if you are the surviving spouse, parent of a deceased minor, or personal representative of the estate – it may be a scam.”
- Inventory of a person’s property. “You need to know how solvent the asset is,” McLeod said.
- Collect bills and pay them in order of priority. Administrative and ongoing expenses such as funeral costs, ongoing property maintenance such as utilities, mortgage and taxes are first; This is followed by secured loans, or loans backed by collateral such as car loans; And finally, unsecured debts such as medical and credit card bills that have no collateral attached.
Unsecured loans are “the most negotiable,” McLeod said. “They know they have to compete against other creditors and they may not get anything because there’s no guarantee behind it. The lowest settlement possible is on the taxes.”
The loan will not be paid if there is no money or assets left in the estate, or the estate cannot make payments, the CFPB said. “For example, when state law requires the estate to be paid to survivors first, there is no money left to repay the loan,” it said.
What if it feels too heavy?
Experts say if grieving feels too overwhelming to you, seek professional help.
Find a local attorney specializing in probate, estate and debt recovery, the CFPB said. If you meet certain criteria, legal aid offices or legal clinics may provide free services. Service members should consult their local JAG office, and older Americans and their caregivers can try the Eldercare Locator, which provides trustworthy local support resources, including free legal assistance for eligible older adults.
There are also companies, like Alix, that offer full-service estate settlement. They work with families to help file for estate representative approval, notify creditors, list assets, collect bills and decide whether to pay or negotiate, Haley said.
Fee schedules vary, so check your needs and budget to help you decide. For example, Alyx charges 1% of the asset value while competitor Elayne charges a fixed fee, regardless of asset size.
Medora Lee is the money, markets and personal finance reporter at USA TODAY. You can reach him at (email protected) and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday to Friday.