What Happens to Someone’s Debts When They Die in Oklahoma?
After someone’s death, most people know that the person’s assets are distributed through the probate process. But what happens to the deceased person’s debts? Generally, their debts are paid using money and property that was left in their estate. The order in which debts are paid is important, so keep reading below to learn all the details.
Handling Estate Debts After Someone’s Death
After someone’s death, their executor will petition the probate court to open an estate. Probate is the process of administering the estate, and that includes distributing assets as well as paying debts. The way that a specific debt is handled depends on the type of debt and whether or not the creditor files a claim against the estate.
During the probate process, the estate executor must publish notice to the estate’s creditors. After publication of the notice, creditors have roughly two months to file a claim against the estate. This requires them to file paperwork with the probate court that specifies the amount and nature of the claim. Creditors who fail to file a claim against the estate may lose their right to collect, and those debts may not have to be paid.
Oklahoma law specifies the order in which valid debts of the estate must be paid. That order is:
- Funeral expenses
- Expenses of last sickness (such as any final medical bills or treatments)
- Family allowance (as allowed by the court)
- Federal, state, or local taxes
- Debts with statutory preference
- Judgment liens and mortgages
- Other claims filed in a timely manner
- All other allowed claims
It is important that an executor understand this order and how these debts are to be paid. This is especially true if the estate does not have enough money to pay all the debts.
Secured Debt Vs. Unsecured Debt
Secured debt is backed by collateral and has a lien attached to the collateral. Common examples include a mortgage on a home or a car loan. These liens remain attached to the property even after the owner dies, so the creditor may be able to take possession of the property if the debt is not paid.
Unsecured debts, on the other hand, have no collateral. This may include things like:
- Credit cards
- Personal loans
- Medical bills
- Utility bills
Creditors who hold unsecured debt must file a claim against the estate to get paid. Even if they file a claim, payment is dependent upon the estate having enough cash or assets to make the payment after other, higher priority debts have been paid.
Can Family Members Be Held Liable for Debts of an Estate?
No, family members may not typically be held liable for someone’s debt after they die. You will not be required to pay those debts out of your own pocket if the estate does not have the funds to cover the debt. However, if you co-signed on a credit card, car loan, or other type of debt, then you may be held responsible as a joint owner of that debt.
To fully understand how debts are handled after someone dies, you should seek help from an experienced probate attorney. At Helton Law Firm, we can help you identify all the valid claims against your loved one’s estate and determine the appropriate payment order. Contact us today to schedule a consultation and let us help you move forward with confidence.
