If I have debt in the US for example on credit cards, hospital bills, etc would my adult children be liable if I pass away?

If I owe mortgage to the bank what would be the situation for my under 18 children? Would the bank give a relief period?

13 Answers

  • 4 months ago

    The executor of your estate will sell your assets to pay for your debts. Your children are not ever going to be asked to pay your debts because those debts are yours, not your children's.

    As far as the house...it will be sold in order to pay your debts. If the house is appraised for less than the mortgage balance, then the keys are handed to the bank if no one can purchase it in their name and pay the mortgage for your children to stay there, with supervision, of course.

    The foreclosure process can take months to a year if payments are stopped.

  • Amy
    Lv 7
    4 months ago

    They are not liable for your debts, but nor do they receive any inheritance until your debts are paid.

    Example: You have $50,000 in the bank and a house worth $300,000 but with $100,000 left on the mortgage. The house will be sold and the mortgage paid, leaving $250,000 to be inherited.

    The bank will not force a sale the house if your children keep paying the mortgage. 

    If that's what they want to do, they should get a new mortgage in their own names, essentially buying the house from your estate.

  • 4 months ago

    Any debt you leave when you die is settled through liquidating your estate. If you own a house, and your minor children are unable to pay the mortgage, then the house will go into foreclosure and be sold by the mortgage holder to pay off whatever remains. Any other debts are quite often written off--such as credit card debt, loans or other unsecured debt. Medical bills would probably also be written off. NOT ALL Debt is written off, though. When you incur it, you need to find out what the policy is for collecting in the event of your death. AND you need to make a will.  The bank doesn't give "relief" periods for mortgage debt in the case of the death of the mortgagee. But if you die without a will and you have anything that will be collected, it may be some time before anyone tries to collect. It will be the responsibility of your executor, or if you don't have one, the state, to settle whatever is left and that takes a little time. 

  • 4 months ago

    Your children wouldn't be liable for your debts. Your estate would.

    So let's say you died with money in the bank and owning your item house, all if which you had willed to your children.

    Before they got a penny, your debts would need to be repaid from any assets you left. If there was anything left, that would be divided according to your wishes.

  • What do you think of the answers? You can sign in to give your opinion on the answer.
  • 4 months ago

    Your children don't owe your debts unless they signed for them as co-signers or co-borrowers.

    However your estate must go through a legal process called "probate" before your children (or other people specified in your will) can inherit your money or assets. During probate your bills must be paid using whatever money you had, so they sort-of indirectly pay your bills in the form of receiving less inheritance.

    If you owe more money that you have then your kids won't inherit anything but they won't owe the difference.

    In the case of a home with a mortgage the estate will need to pay the mortgage until the house can be sold. Whatever is left after the mortgage is paid will go into the estate and toward other debts - anything left over after that goes to your kids or other heirs.

    If a family member wants to keep your house they have to buy it from the estate with their own mortgage and pay off your old mortgage.

  • 4 months ago

    No they are not.

  • Maxi
    Lv 7
    4 months ago

    Whatever estate you leave would be liuidated to pat off your debts, so the house would be forclosed/sold to pay the debt you owe, if your children are minors then the other parent would take them or maybe another family member or foster care... the bank would not give a 'relief period' because of them

  • 4 months ago

    Debt - it is charged off against the assets. 

    If you owe $10,000 and have $15,000 in assets, then the bank takes the $10,000 and there is $5000 left.

    If you owe $10,000 and there is $5000 in assets, then the $5000 goes to the bank, and the remainder is written off.

    Mortgage - Depending on the policy of the bank, they may allow up to a month's delay for the first  payment from the estate. In general, there will also be some late fee. More than that, and they can foreclose, although most banks will work with you to get things going again.

    For the mortgage question - it is best to have mortgage insurance - it is not too expensive and will cover you in these situations.

  • 4 months ago

    Your debts do not vanish if you die; they are charged against the value of your assets in your estate. If assets are less than liabilities the debts are discharged.

  • 4 months ago

    These are different questions. If someone inherits a house, they inherit the mortgage. Of course, they can sell the house and pay off the mortgage. The bank does not help. 

Still have questions? Get answers by asking now.