Parent/Relative Dies Can They Transfer Debt to You?

[Kristopher Kelly]

Good morning,

I have two parents (divorced) that have a large amount of debt. Does anyone happen to know what will happen when they die? I don't want to inherit debt from them, especially my mom that is in 150k+ of horrible credit card debt and other high-interest debt. I had a buddy that had a friend her great uncle died and he had no other family besides her and he left a bunch of "debt" to her without her knowing. How can I avoid this? And how does this work? Thank you all for any help you can provide. 

[Matt Devincenzo]

You don't inherit debt it is an estate asset/liability and you just choose how to handle it inside of the estate. If your relative has assets you would sell those and then pay off the debt with the assets, because doing so you get whatever value remains. If they don't have assets or are underwater you simply choose to do nothing and let the creditors attempt to collect whatever the can from the estate. But the remaining unpaid debts do not somehow pass through to you. 

So either your friend chose to take care of things because there was still an upside value for them, or they did so under the misinformed notion that they needed to...how would a creditor even collect? They have no social, no borrower info and no signed documentation stating you intend to pay, so what recourse would they pursue to enforce a debt against the heir?