When a loved one passes away, their estate goes through probate, the legal process of settling debts and distributing assets. If you are the executor or a family member dealing with an estate, you may feel overwhelmed—especially when debts are involved.
A probate lawyer in Las Cruces, NM, can guide you through this process, ensuring debts are handled correctly while protecting your rights and the estate’s assets.
What Happens to Debt During Probate in New Mexico?
Debts do not simply disappear when someone dies. Instead, they become part of the probate process, which involves:
- Identifying all debts and liabilities
- Paying creditors before distributing assets to heirs
- Determining which debts must be paid and which may be dismissed
In most cases, heirs are not personally responsible for a deceased loved one’s debts unless they co-signed a loan or held a joint account. However, there are exceptions, such as in community property states like New Mexico, where a surviving spouse may be responsible for certain debts. Read more in our article, Must I Pay for Spouse’s Debt If They Die?
Types of Debts and How They Are Handled
During probate, debts are categorized and prioritized according to state law:
Secured Debts
- Include mortgages and car loans, which are tied to assets.
- If unpaid, creditors may foreclose or repossess the property.
- Beneficiaries who want to keep an asset may need to refinance the debt.
Unsecured Debts
- Include credit cards and personal loans.
- Paid from the estate’s liquid assets.
- If the estate lacks funds, these debts may go unpaid.
Medical and Nursing Home Debt
- Paid from the estate before assets are distributed.
- If Medicaid paid for long-term care, the state may seek reimbursement.
Student Loans
- Federal loans are discharged upon death.
- Private loans may still require repayment from the estate or a co-signer.
Protecting Yourself from Debt Collection
Debt collectors may contact family members, but they cannot legally demand payment unless you are financially responsible. Some key points to remember:
- Do not rush to pay debts out of pocket—consult a probate attorney first.
- Understand your rights—New Mexico law outlines which debts must be paid.
- Debt collectors must follow the law—they cannot mislead you into paying.
How a Probate Lawyer in Las Cruces, NM Can Help
Navigating probate can be complex, especially when debts are involved. A probate lawyer ensures:
- Proper debt prioritization—so you don’t pay unnecessary debts.
- Protection from personal liability—keeping creditors from pressuring you.
- Negotiation with creditors—to reduce or settle debts when possible.
- Compliance with state laws—to avoid costly mistakes.
Register to watch our masterclass, What to Do When a Loved One Dies, to learn how to manage the probate process with the help of a trusted attorney.
Plan Ahead to Ease Probate Challenges
Estate planning can prevent confusion and financial strain on your loved ones. Creating a will, listing debts and assets, and consulting an estate planning attorney can simplify the probate process.
If you are handling probate or want to plan ahead, contact E-Law today. Our experienced probate lawyer in Las Cruces, NM, will guide you through the process and ensure your family is protected.
Key Takeaways
- Estate Responsibility: Debts are typically paid from the estate’s assets, not directly by heirs, unless they co-signed loans or reside in community property states.
- Secured vs. Unsecured Debts: Secured debts may require repayment to retain assets, while unsecured debts are addressed based on estate liquidity.
- Medical and Student Loans: Federal student loans are discharged at death. However, Medicaid or private loans may still seek recovery from the estate.
- Avoid Personal Liability: Heirs should not assume responsibility for debts without legal obligation and can negotiate with creditors through the estate.
- Proactive Planning: A clear estate plan with a debt inventory can prevent confusion and streamline estate administration for loved ones.
Reference: National Bereavement Service (2024) “Can you inherit debt?”
