Death and Debt : Is a widow liable for dead husbands debt and bills?

The death of a spouse is an extremely troubling time, so it can add increased stress if a spouse has to deal with increased debt along with the death of a loved one.  Unfortunately, the debts of a spouse do not go away after a person dies so someone else will have to absorb the costs of the outstanding debt. 

There are a number of options to take when dealing with a loved one’s debt burden.  Often a life insurance policy is set up to pay off debt, but you want to avoid this whenever possible.  If there is a large amount of debt, this will decrease the value of the life insurance policy, thereby increasing the surviving spouse’s financial burden. 

But what if there is no life insurance policy or savings account to cover the amount of debt?  Or what if the debt absorbs most, if not all, of an existing savings account?  A widow has a number of options to help pay of her spouse’s outstanding debts and bills.

Debt Consolidation

Really, you should not think of debt during bereavement any differently than debt during other times of your life.  A debt consolidation firm can and should be more sensitive to your debt problems as a result of death, but the principles of debt consolidation still remain: Consolidating all of the outstanding debts into one major debt, which may have a lower debt ceiling, lower interest rate, and is less prone to delinquency, as there is only one debt to pay.  Overall, this can lessen the burden of that incoming mountain of bills by consolidating the bills into one payment. 

Lenders on the whole will be more sensitive about debt as a result of bereavement. What this means is that you should inform lenders about potential defaults as soon as possible – potentially even before your spouse has died and is in the hospital.  If you’re receiving piles of “past due” notices, this is not because of insensitivity on the part of creditors.  They do not know your personal situation unless you let it be known.  If you do inform your lenders of a pressing personal matter, they should be sympathetic and arrange for a lower payment plan. 

But even negotiating with lenders can be troubling, so it is recommended that you contact a debt negotiator to manage these debts.  Questions to ask your debt negotiation specialist include:

1. Can lenders reduce the amount of debt in times of bereavement?
2. How much of a reduction in debt payments is possible? 
3. How long until these debts again register as defaults?
4. Does a large sum of money need to be paid upfront?
5. How long will it take to pay off these debts?
6. How long will the debt negotiation process take?
7. Is bankruptcy an option? 

Filing for Bankruptcy

In certain cases, even a reduction of debt payments will not be enough.  If you do not have an income or otherwise cannot pay the outstanding debts – whether it’s the mortgage, credit cards, personal loans, or other debt – then bankruptcy may be an option.  Be sure to ask your debt specialist if bankruptcy is the best and only result.  For example, it is possible to reduce payments of a mortgage through loan modification.  Again, sometimes even reduced payments are insufficient.  Bankruptcy is of course a last resort but it can also ease the burden of financial distress, which is especially important during a time of personal sorrow and persona crisis. 

Bereavement Support

Click here to find out about issues regarding government protection during times of bereavement.  Not only might you be saddled by your spouse’s debts, but care for a sick spouse could mean the loss of work hours, which could increase a debt burden.  Unfortunately, there is no bereavement law protecting people in this situation and will need to be handled and employer by employer basis.  

The Family and Medical Leave Act does not automatically provide support for grieving families.  In order to get FMLA compensation, a person needs to prove that the request is tied with a personal health ailment, including depression.  But this coverage is not automatic.