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What happens to a person’s debt when they pass away? 

On Behalf of | Oct 26, 2022 | Probate

When a person dies, the individual appointed to administer their estate will step up and get started on the process. 

While this often involves dealing with distributing assets according to a will, there’s also the issue of handling any unpaid debt. It leaves executors and beneficiaries of the deceased’s will asking the question, “Are the debts still owed?”

Ohio laws for debts owed by the deceased

The first thing to note is that, unless the debt was co-signed by another individual (i.e. a joint loan or credit card), no other person is liable for this debt. The debt is not transferable to the deceased’s heirs.

Unfortunately, this doesn’t mean that the debt simply goes away and payment of debt takes precedence over beneficiaries receiving their entitlement. 

Under Ohio law, creditors of unsecured debts have a period of six months from the date of death in which to make a claim against the probate estate for the money owed. If they do not make a claim within this period, they are then barred from doing so altogether. If creditors of unsecured debts do make a claim they will join a list of creditors. If there’s not enough money in the estate the chances are high they will not get paid. 

It’s important to recognize that secured debt is treated differently. Creditors can force a sale of a house to redeem a mortgage or can take possession of a car subject to a loan. To avoid this happening, someone will need to continue making the payments in the interim period before the estate can pay. 

There are things that can be done by experienced legal professionals during the probate process to make sure beneficiaries get the most out of their inheritance from an estate.