A topic that is often overlooked regards debts for people over the age
of 65. If debts are large enough, who will be responsible for paying such
debts after the elderly person can no longer pay them? Sources state that
although assets and income are lawfully protected, creditors can wait
to recover finances from the elder person’s children.
To help you understand how this process may work, our team has answered
a few questions:
1. What Makes it Difficult for Creditors to Collect from Elders?
Because most elders are protected from creditors which can prohibit creditors
from seizing payments for legitimate debts and assets, creditors often
wait to collect compensation until after an elder passes.
In most cases, a senior is protected by the following:
- Exemption laws
- Pension laws
- Social Security Act
2. What Happens When Debts Survive After a Debtor Passes?
To clarify, heirs do not become personally responsible for a debtor’s
debts. However, debts must be completely paid before an heir can receive
anything. This means that debts are paid before an estate is touched.
If a passed debtor formed a living trust, the trust will, in most cases,
indicate that the successor trustee should pay the debts of the trustor first.
If property is dispersed after death without fulfilment of the decedent’s
debts or probate, the distributed property remains responsible for the
debts of the decedent for a specified amount of time. This interval of
time varies on a state-by-state basis. Regardless, if debts outlive a
debtor, the heirs cannot collect their rightful estate. In these cases,
it is only a matter of time before creditors can collect assets in order
to satisfy debts.
3. Can Bankruptcy Protect the Children of a Debtor?
In some cases,
bankruptcy can be a solution used to protect a debtor’s children if the elderly
person is suffering from serious financial debts. Filing for bankruptcy
is especially useful for seniors who have assets that are protected from
creditors. In addition, certain exemptions that are designed to protect
these assets remain available during the bankruptcy process. Opting out
of filing for bankruptcy can force creditors to collect from the estate
after the elder person passes.
Considering Filing for Bankruptcy? Our Team Can Help
If you believe bankruptcy can improve yours or your children’s financial
situation, get in touch with
our Chicago bankruptcy lawyers at Sulaiman Law Group, LTD. right away. We can examine your situation
to determine which type of bankruptcy can leave you in a better financial
standing. We understand the stresses associated with these types of problems,
and that is why we are here. We can handle all of the complicated legal
matters so you can focus on creating a happier life for yourself and your family.
To discuss your case,
call our bankruptcy attorneys in Chicago! We are ready to improve your future.