How Debts Are Handled in New Jersey Probate
How Debts Are Handled in New Jersey Probate
When a loved one passes away in New Jersey, their estate must go through a legal process called probate. This process ensures that debts are paid, and assets are distributed according to the will or state law if there is no will. Understanding how debts are handled during probate is essential for executors, heirs, and anyone navigating this process.
1. Identifying the Estate’s Debts
The first step in handling debts during probate is identifying all outstanding obligations. These can include:
- Credit card balances
- Mortgages and home equity loans
- Car loans and personal loans
- Medical bills
- Utility and service bills
The executor, appointed to manage the estate, must gather this information and notify creditors of the probate proceeding.
2. Prioritizing and Paying Creditors
Not all debts are treated equally under New Jersey law. Certain debts have priority:
- Funeral expenses and estate administration costs
- Taxes owed to the state or federal government
- Secured debts, such as mortgages and car loans
After priority debts are paid, remaining assets are used to satisfy unsecured debts like credit cards. If the estate does not have enough funds to cover all debts, the estate may be considered insolvent, and creditors will be paid in order of legal priority.
3. Protecting Heirs from Personal Liability
In most cases, heirs and family members are not personally responsible for the decedent’s debts. Debts are paid only from the estate’s assets. Exceptions may apply if someone co-signed a loan or jointly owned a credit account.
4. When Legal Guidance is Essential
Probate can quickly become complicated, especially when debts exceed available assets or when creditors make claims against the estate. Working with an experienced probate attorney ensures compliance with New Jersey laws, protects the executor from liability, and helps resolve creditor issues efficiently.
At Juan C. Velasco, Esq., we provide compassionate and knowledgeable legal assistance to the public in Akron and beyond. If you are facing the challenges of probate and debt resolution, we can guide you every step of the way.
