Introduction
If you happen to receive an inheritance in the form of money or assets, it is understandable to have concerns about the possibility of creditors attempting to seize those funds or properties. This can be a stressful situation, but steps can be taken to protect your inheritance and ensure that it remains rightfully in your possession. Here’s what you need to know about how debt collectors can impact your inheritance:
The short answer? No.
Inherited money is protected from creditors; even if you’re dead, your estate is not liable for debts. This means that debt collectors can’t take any funds that have been willed to you. For example: Let’s say your grandmother left $50,000 in her will to be used as an inheritance for each of her grandchildren (you). It’s important to note that if any of the grandkids are sued by a creditor seeking repayment, the $50k that now technically belongs to the grandchildren cannot be seized. The creditor has no right or claim over any assets owned by the deceased person’s family members–they would need permission from those inheritors first before they could try taking anything away from them (and even then, there are limits).
Inherited property is also protected from creditors.
That means if you inherit a house worth $200,000, no one can come after you for the money owed on the mortgage. However, this protection only lasts one year after receiving the inheritance (or two years in some states). After that period of time has passed, any debts attached to your inherited property will become yours and may be pursued by debt collectors like any other debt–unless there are other local laws protecting it from collection efforts.
If there are no additional protections available under state law or federal bankruptcy law (for example), then once an estate has been settled (and thus any creditor claims have been paid off), whatever remains becomes yours free and clear–but only if no one else has claimed ownership rights over those assets beforehand!
There are some exceptions.
If you’re a co-signer or joint owner of the account, you may be liable for the debt. If a creditor has already filed a claim against your inheritance and won in court, they can also go after your assets. In this case, it’s best to consult with an attorney specializing in debt collection laws to help determine what steps need to be taken next and whether challenging the creditor’s claim is worth it.
If you think there’s been some kind of mistake and/or there was no reason for anyone to take money from your inheritance (for example, if they didn’t own that particular debt), it may be worth challenging their claim on your funds.
You can challenge a creditor’s claim to your inheritance if you think it’s fraudulent or if the creditor wasn’t entitled to the money in the first place.
You can do this through court or settle it with them outside of court. If you win in court, the creditor must return the money to you. If you lose but still want to get some of your inheritance back from the party who took it from the person who passed, they may agree to return part of what they owe and keep some as payment for services rendered.
Inheritance and debt are separate issues
Inheritance and debt are separate issues. Inheritance is a legal right, whereas debt is a legal obligation. Just because you inherit money doesn’t mean that you always get to keep it if there are still outstanding bills to pay.
Inheritance cannot be taken away from you by others, nor does it impact your ability to pay off your own debts (unless they were acquired with the intent of paying off someone else’s). If someone dies owing money to someone else and leave behind assets like cash or property, those assets will go towards paying off their debts before going into anyone else’s hands as inheritance
If you have any questions or concerns about receiving inheritance and its impact on your debt, it is important to talk with a lawyer and/or financial advisor before any inheritance is received.
If you are looking for a better solution to paying off debt, we can help! Request a Custom Debt Relief Plan today!