I am often asked this question by clients and the bottom line is this: You do not inherit debt under Alabama law. If you co-signed on a loan with them, then you would be liable for the remainder of that loan. But if they ran up $50,000 on a credit card debt in their name only before they died, then the credit card company just won’t be paid. You may have to provide a copy of the death certificate to the creditors so that the debts could be written off by them. Further, you may not receive inheritance from them due to their property being sold off to pay their creditors.
Let me give you an example that I see happening quite often in our practice. Let’s say the deceased family member owned a home and they are behind on the mortgage or they owe more on the house than it’s worth. You could simply let the mortgage company have the home. You would owe nothing. The mortgage company would go through the foreclosure process and write off the debt. You would not have any legal or moral obligation to accept the house and continue to pay for it. Sometimes people think if they are given something in a will, they must keep it. You do not have to if it’s not a benefit to you.
Let me say it again—You do not inherit debt under Alabama law. Do not let any creditors or anyone else tell you differently.