Death Doesn’t Stop Bills from Coming, but You Don’t Have to Pay Them All

No one ever wants to deal with a stack of bills, much less just after the death of a loved one. Yet, that’s exactly what often happens.

Bills don’t stop coming after someone dies, experts said. A deceased person’s mortgage or rent, utilities, tax, loan payments and final credit card and medical bills, among others, will continue to come. That can feel overwhelming, on top of your own bills coming due and as you’re adjusting to life without a loved one.

Don’t worry, experts said. Many bills don’t have to be paid immediately, some will be negotiated down and others may not ever have to be paid at all, they said.

“We’re all raised to pay bills on time or early and pay the amount they send you,” said Delaney Haley, certified trust and fiduciary advisor and head of customer operations and experience at estate settlement platform Alix. “It’s ingrained in us. When someone dies, it’s very hard not to pay all the bills, but there is a time to pay and then, there is a chance to negotiate.”

None of those times is immediately after someone dies or when you receive the bill, she said.

What Should People Do When Bills Begin Coming In?

If you need to “keep electricity on in a house, that’s a little different,” Haley said. Mortgages, taxes, insurance and utilities related to the property should continue getting paid. If you pay those, keep receipts and records because when the estate settles, you can get reimbursed, she said.

Other bills, such as final hospital and other medical bills and credit card bills, should be collected and put aside for later, she said. Even if aggressive debt collectors contact and threaten you to pay, resist, experts said.

You’re never personally responsible for paying a deceased person’s debts from your own assets, unless you were a joint account holder or co-signer on a loan, or live in a state that requires a surviving spouse to be responsible, according to the Consumer Financial Protection Bureau (CFPB).

“The hardest thing to do is wait, take a deep breath and take inventory,” said Chase MacLeod, founder of commercial real estate brokerage MacLeod & Co who has been through the process with family and friends. “You have to see what liquidity is compared to outstanding bills first. Then, there’s a strict order of operations of what gets paid first.”

If a lower-priority debt like credit cards is paid and later there’s not enough money to pay higher-priority claims such as funeral expenses, the executor or family can be held personally liable for the shortfall, experts said.

What’s the Process?

When someone dies, experts say follow these steps:

Determine the estate representative. A person’s will likely has named someone. If there’s no will, file a petition to the probate court to name someone.
The estate representative will notify known creditors and heirs and publish a public notice in a local newspaper to alert unknown creditors of the person’s death. State laws determine how long notices must be published or how long creditors have to respond, Haley said. Once creditors are notified of a death, fees or interest can’t accumulate, she said.

Creditors that don’t respond in writing by the deadline won’t get paid — another reason not to pay bills immediately, she said.
Be vigilant of scams during this time. Debt collectors are required to provide specific information about a debt, usually in writing, during your first communication with them or within five days of the first communication, CFPB said. “If the collector refuses to give you any information about the debt — even though you are a surviving spouse, parent of a deceased minor, or personal representative of the estate — it might be a scam.”

Inventory the person’s assets. “You need to know how solvent the estate is,” MacLeod said.
Collect bills and pay them in order of priority. Administrative and ongoing expenses such as funeral costs, ongoing property maintenance like utilities, mortgage and taxes are first; followed by secured debts, or loans backed by collateral such as a car loan; and lastly, unsecured debts such as medical and credit card bills that have no collateral attached to them.

Unsecured debts are “most negotiable,” MacLeod said. “They know they have to compete against other creditors and may get nothing because there’s no collateral behind it. Probably the least negotiable is taxes.”

If there’s no money or property left in the estate, or the estate can’t pay, the debt will likely go unpaid, CFPB said. “For example, when state law requires the estate to pay survivors first, there may not be any money left over to pay debts,” it said.

What If This Feels Too Overwhelming?

Enlist professional help if this feels too overwhelming while you’re grieving, experts said.

Find a local lawyer specializing in probate, estate and debt collection, CFPB said. If you meet certain criteria, legal aid offices or legal clinics may offer free services. Servicemembers should consult their local JAG office, and older Americans and their caregivers can try the Eldercare Locator, which provides trustworthy local support resources, including free legal aid for eligible older adults.

There are also companies, like Alix, that provide full-service estate settlement. They work with families to file for approval of the estate representative, notify creditors, inventory the estate, collect bills and help decide whether to pay or negotiate them and ensure taxes are completed, Haley said.

Fee schedules vary, so examine your needs and budget to help decide. For example, Alix charges 1% of the estate value while competitor Elayne charges a flat fee, no matter the estate size.

Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at [email protected] and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.