What Happens to a Debt in Minnesota After Someone Dies?

What happens to a debt in Minnesota after someone dies?

• When a person dies their family and friends can inherit that person’s money and property, right?

That makes sense, doesn’t it?

If someone worked hard during their life and accumulated lots of assets, they should be able to leave those assets to their friends and family after passing away, shouldn’t they?

But what about debt?

If your parents die without paying off all of their debt, what happens to that debt?

• Does anyone else owe it?

It seems less fair to make children responsible for paying off the debts of their parents.

Can you inherit debt?

Thankfully debt is not inheritable according to Minnesota Statutes § 548.07.

• The basic rule in Minnesota is that debts die with the person who owes them

That is right, you cannot inherit debt.

Collection agencies will sometimes call the next of kin after someone dies to ask the survivors to pay the debt in Minnesota after someone dies but:

• The family does not legally owe the debt

The collectors know that it is illegal to sue to collect this debt, but they will try to convince people by saying things like:

• “Someone has to make this right”
• “Do you want to ruin your mother’s good name by leaving this unpaid?”

These tactics prey on a grieving person and try to get money that the survivors do not owe.

According to the New York Times, trying to collect from the unsuspecting relatives of dead people is a growth area for debt collectors.

WHAT HAPPENS IF SOMEONE HAS MONEY OR PROPERTY WHEN THEY DIE?

Laws vary around the country, but when someone dies in Minnesota, all of their money and property goes into something called an estate.

Creditors get paid from any money in the estate, and anything that is left over gets distributed according to the dead person’s will.

If there is no will, then the money goes to the family of the dead person.

WHAT IF A CREDITOR HAS A JUDGMENT?

In Minnesota, judgements become liens against any land or real property in the county in which the judgement is docketed.

This means that:

• If there is a judgement against someone with a piece of real property, then that lien gets paid first if the house is sold

This is true even if it is the surviving family which sells the house.

One big benefit of filing for Chapter 7 Bankruptcy or Chapter 13 Bankruptcy is that it voids judgments and allows you to remove them from land.

Another good reason to file bankruptcy is if there is a judgment against you and you want your family to be able to inherit your house without problems.

CONCLUSION

If you need more information, help and advice about what happens to judgments after a death, why not contact us on 612.824.4357 now and tell us what you want to know.