Panicking is a common state of mind when you realize that your loved one has died and medical and credit card bills have piled up. You may think who is the responsible person for bill payment. Is it you? In most cases, you are not the one to pay the bills. There are exceptions like surviving spouse, living in community property state, you are a co-signee of the debt, but mostly, you do not inherit debt.
The state law and solvent estate of the decedents decide who is responsible for the deceased person's bills.
What Is a Solvent Estate?
The person appointed as a personal representative or executor of an estate will pay the medical debts of a deceased person as a part of the probate process. An estate is solvent when the person has left enough property and cash to pay off the medical bills and credit card debts. The solvent estate will have exceeded the amount of property than the owed amount when everything is clubbed together and the property and cash in the bank accounts.
The executor can use the cash in bank accounts and liquidate the assets if required to pay off the bills.
What Is an Insolvent Estate?
When an estate does not have enough property and assets or liquid cash in the bank accounts of the decedent's it is mentioned as insolvent. The total amount of the asset should be equal to or less than the owed debts.
According to state and federal laws, the executor should always prioritize paying the medical debts in an insolvent estate. The statutes say which creditor would be paid first in full, who will get partial payment and who will get nothing.
Medical bills have superiority in some states when they are acquired in a certain period, such as 60 days before the death. Therefore, the executor should pay these debts and other priority debts first, and other debtors such as credit card issuers will get the leftover amount distributed proportionately.
Sadly, the heirs of an insolvent estate of a deceased person will get nothing, but they are not also responsible for paying off the debt. Therefore, companies that did not fully get their debts should write them off.
Nursing Home Bills
Nursing home bills in a few states are critical. Some jurisdictions let the organizations chase a deceased person's adult children to pay off their medical debts.
Cosigned Debts
The situation of unpaid medical debts is also different when someone else was the co-signee of the debt. If someone has cosigned the debt, it will not be null and void with the death of the one signee. However, the other person would have to pay off the debt. In this case, a solvent estate is also not responsible for paying debts.
Marital Debts in the Community Property States
If your spouse has debts in a community state, this is generally considered a debt for you. It does not matter who has contacted for the debt. The marital community owes the debt and not an individual spouse, and the surviving spouse could be responsible for paying it off.
Now, here the word ‘could’ is an essential part. The laws are complex and differ according to the community property states. The states are California, Texas, Nevada, New Mexico, Arizona, Louisiana, Wisconsin, Idaho, and Washington as of 2019.
If you stay in any of these states and, unfortunately, your spouse dies with medical debts, contact your attorney to learn your responsibilities and rights. Some states do not make the marital community responsible for the debts, but others do so.
The creditors can contact a healthcare debt collection agency when the debts are not paid, but the estate is solvent. The third-party collection agency works for the service providers and recovers the debts.
Vital Solutions is operating in the United States and working for debt recovery. So for your medical debts, see us for a quick recovery.
