A recent article from the Huffington Post points out one of the minor tragedies that accompanied the larger tragedy of singer Whitney Houston’s recent death: that, despite her enormous talent and widespread popularity, the singer died more or less broke.
What’s more, because she had reportedly been living off advances from record labels for a number of years before her death, her estate now owes money to those companies—which means that, even in death, Houston will have debt.
When Can Debt Survive Death?
While it may not be one of the more pleasant aspects of debt to contemplate, some debts do have the ability to survive death. Here’s a look at when and how a debt survives death.
- Jointly held debts. Debts held jointly by more than one borrower will almost certainly survive the death of the first borrower. Common examples include mortgages, car loans, or credit cards that spouses initiate in both their names. After the death of one borrower, the other borrower becomes responsible for repaying the balance of the debt.
- Individually held debts. In most cases, debts that are held by an individual cannot be inherited by his or her survivors following death. In other words, a credit card’s debt will not pass on to a spouse or a person’s next of kin after that person dies.
- The role of state property laws. The exception to the above is in community property states, where all debt incurred during a marriage is assumed to be jointly held debt. That means that in marriages, even debts taken out under the name of only one spouse may be “passed on” or “inherited” after death.
- The role of the “estate.” Perhaps the simplest way that a debt can survive a debtor’s death is through the debtor’s estate. If a debtor has debt at the time of his or her death, money or proceeds from the sale of his or her belongings might be used to repay those debts before it can be distributed among heirs.
In the case of Whitney Houston, her debts to record labels will apparently be repaid by her estate. Proceeds from future sales of Houston’s music will be channeled into this estate, and the money in that estate will be distributed among those to whom Houston owed money at the time of her death.
Unfortunately, the dead cannot declare bankruptcy to have such debts removed.
What to Do if You’re Left with Debts after a Loved One’s Death
In order to determine whether or not you legally owe debts left behind by a loved one, you may want to speak with a lawyer in your state who can clarify the laws of debt and succession where you live.
Please note that some unscrupulous debt collectors will attempt to collect on debts that survivors don’t legally owe in hopes of “guilting” them into repaying their loved ones’ debts!
