Revealed! Black landowners’ fight for justice
Saul Blair is fulfilling a promise to his late mother by fighting to retain and control the land his great-grandfather purchased in Rail, Georgia.
No one wants to deal with piles of banknotes right after the death of a loved one. But that’s exactly what happens often.
Experts say claims don’t stop when someone dies. The deceased person’s mortgage, rent, utilities, taxes, loan payments, last credit card and medical bills will continue to accrue. It can feel overwhelming when you’re trying to adjust to life without your loved one on top of your own bills coming due.
Don’t worry, experts said. Many bills don’t have to be paid right away, some can be negotiated down, and some don’t have to be paid at all, they said.
“We’ve all been raised to pay our bills on time or early and pay what’s transferred,” says Delaney Haley, a certified trust and fiduciary advisor and director of client operations and experience at real estate settlement platform Alix. “It’s deeply ingrained in us. When someone dies, it’s very difficult not to pay all the bills, but there’s a time to pay and then there’s a chance to negotiate.”
She says right after someone dies or receives a bill is not the right time.
What should people do once their bills start arriving?
“It’s a little different when you need to keep the lights on in your home all the time,” Haley said. Mortgages, taxes, insurance, and utilities associated with the property must still be paid. If you pay these, keep your receipts and records, as they may be refunded once the estate is settled, she said.
Other bills, such as final hospital and other medical bills and credit card bills, should be collected and saved for later, she says. Experts say even if an aggressive debt collector contacts you and threatens to pay, resist.
According to the Consumer Financial Protection Bureau (CFPB), you are never personally responsible for paying a deceased person’s debts out of your own assets, unless you were a joint account holder, cosigned a loan, or lived in a state that imposes liability on a surviving spouse.
“The hardest part is waiting, taking a deep breath and taking inventory,” said Chase McLeod, founder of commercial real estate brokerage McLeod & Company, who has gone through the process with family and friends. “Firstly, we need to see what the liquidity is compared to outstanding invoices. Then there is a strict order of what gets paid first.”
Experts say if there aren’t enough funds to pay off lower-priority debts, such as credit cards, and then pay higher-priority bills, such as funeral expenses, executors and family members may be held personally liable for the shortfall.
What is the process?
Experts say the following steps should be taken when someone dies:
- Decide on a real estate representative. The person’s will probably nominated someone. If you don’t have a will, file a motion with the probate court to have someone appointed.
- The estate administrator will notify known creditors and heirs and place a public notice in the local newspaper to alert unknown creditors of the person’s death. Haley said state law dictates how long notices must be issued and how long creditors have to respond. Once creditors are notified of a death, fees and interest cannot accumulate, he said.
- Creditors who don’t respond in writing by the deadline won’t be paid, she said, another reason not to pay your bills right away.
- Be careful of scams during this time. According to the CFPB, debt collectors must provide specific information about the debt, usually in writing, during the first interaction with the debt collector or within five days of the first interaction. “Even if you are the surviving spouse, parent of a deceased minor child, or personal representative of an estate, if the collector refuses to provide information about the debt, it may be fraud.”
- Create an inventory of the person’s assets. “You need to know how solvent the property is,” MacLeod said.
- Consolidate your bills and pay them in priority order. Administrative and ongoing expenses, such as funeral costs, utilities, mortgages, ongoing asset management such as taxes, etc. come first. This is followed by secured debt, or secured loans such as car loans. And finally, there are unsecured debts such as medical bills and credit card bills that have no collateral attached.
MacLeod said unsecured debt is “the easiest to negotiate.” “They know they have to compete with other creditors, but they may not get anything because there is no collateral. Taxes are probably the least negotiable.”
According to the CFPB, a debt is likely to go unpaid if there is no money or property left with the estate or if the estate is unable to pay. “For example, if state law requires an estate to pay the surviving family first, there may not be any funds left to pay the debt,” the paper said.
What if this feels too overwhelming?
Experts say if you find this too much to bear while grieving, seek professional help.
The CFPB said find a local attorney who specializes in probate, estates, and debt collection. Legal aid offices and legal clinics may offer free services if you meet certain criteria. Military members should consult their local JAG office, and older Americans and their caregivers can try the Eldercare Locator, which provides reliable local support resources, including free legal aid for eligible seniors, the agency said.
Some companies, like Alix, offer full-service estate settlement. They work with families to apply for estate administrator approval, notify creditors, inventory the estate, collect bills, help decide whether to pay or negotiate, and help ensure taxes are paid in full, Haley said.
Pricing schedules vary, so consider your needs and budget before deciding. For example, Alix charges 1% of the property price, while its competitor Elayne charges a flat fee regardless of property size.
Medora Lee is USA TODAY’s money, markets and personal finance reporter. Please contact us at mjlee@usatoday.com. Subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.
