‘She has no life insurance or savings’: My brother-in-law died, leaving my sister with $20,000 in debt. How can I help her?

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Dear Quentin,

My sister’s husband died last week. They had both lived with us for the previous nine years before moving into an independent living facility. They were there for two and a half months before he died unexpectedly. He has left her with $20,000 worth of debt. Other than selling his vehicle — as she doesn’t drive — I’m not sure how to go about paying off their debt.

She receives $1,600 in Social Security disability a month. She is on Medicaid and Medicare. She has no life insurance or savings. She is now living with my husband and me. She has dementia. She needs 24/7 care. I do have her power of attorney. Any advice on how to pay off their debt? This is a bit overwhelming, and I feel the need to start somewhere.

Worried Sister

Dear Worried,

It may be that this debt died with your brother-in-law.

If there are no co-signers on those debts, they are usually erased. If your sister was not listed on these joint bank or credit-card accounts, or on personal loans for his vehicle, she is likely not responsible for the debt. Notify the financial institutions of your brother-in-law’s death.

Where your sister lives also matters. In some community-property states — Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin — debt incurred during a marriage is deemed “community” responsibility. That is, both spouses are liable for that debt. 

But according to the Consumer Financial Protection Bureau: “In most cases you will not be responsible to pay off your deceased spouse’s debts. As a general rule, no one else is obligated to pay the debt of a person who has died. There are some exceptions and the exceptions vary by state.”

“Unless there is an exception, you do not have to take responsibility for the debt of the deceased person. You are not obligated to do this and the creditor or debt collector cannot use unfair, deceptive, or abusive practices to get you to assume responsibility,” the CFPB adds. You can read more on that here.

Contact the three main credit bureaus — Experian
and Equifax
— with your brother-in-law’s notice of death, and his credit report will be flagged to say that he has passed on. Doing this will also prevent someone from attempting to take out credit in your brother-in-law’s name.

This is an unusual situation. Inform any creditors that your sister is suffering from dementia and has no income or assets. The U.S. Treasury only garnishes a person’s Social Security for federal loans, unpaid child support and/or unpaid taxes owed to the Internal Revenue Service.

Focus on making this time for her as comfortable as you can.

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