Recently on our forum a user asked, “If my spouse has died and I live in a community property state will I be responsible for repaying his medical bills?”
Having a spouse die can be one of the most devastating events in a person’s life. Unfortunately, even after death, life does not stop, and creditors may continue to collect debts, including medical bills. But whether or not you will have to repay your spouse’s debts after the assets of their estate have been distributed may depend on whether you live in a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin) and whether the debts were acquired during the marriage.
What happens after the death?
Whether or not you live in a community property state or not, an executor will be appointed to distribute property and assets according to the will (or probate laws if a will does not exist) and certain debts will be paid.
First, the executor will determine what constitutes the estate. This can include all of the decedent’s property: cars, possessions, and houses. The executor will also determine if the deceased had any debts and repay these debts. This can be done by using cash in bank accounts or other funds or selling assets and using the proceeds from the sell to repay the creditors.
So what happens if there are remaining debts after the distribution or sell of the assets? In most states creditors are not allowed to collect debts from any remaining relatives. This may not be true, however, in community property states where the remaining spouse may legally be responsible to repay certain debts.
(State laws vary. Talk to an estate planning attorney to determine the laws in your own state and to determine whether you are responsible for your spouse’s debts in a non-community state)
Do I live in a community property state?
If you live in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin, you live in a community property state.
So what does this mean for you? It means that any debts that you and your spouse acquired during marriage are the responsibility of both spouses, regardless of whether or not your name is on the loan application.
For example, if your spouse goes to the hospital and generates $25,000 in medical bills but later dies, the hospital can attempt to collect the medical bills from you after his death. Consider, however, debts which a spouse acquired prior to marriage may not be your responsibility. So it is important to determine when the debt was accumulated.
Options for debt after a death for medical bills
So what do you do after your spouse dies if you are facing an economic crisis and you live in a community property state? Filing bankruptcy may be an option for some debtors, especially if the debts are unsecured debts such as credit card bills and high medical bills.
Older debtors who have limited assets and who are living on Social Security, however, may find that even if creditors do attempt to collect their deceased spouse’s debts there will not be any assets to repossess and the creditors may be banned from garnishing certain types of income. In this case, filing bankruptcy may be unnecessary. Talk to a bankruptcy lawyer if you have questions about whether bankruptcy is right for you.
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