Can I be responsible for my parent's debt?
February 6, 2013 8:46 PM   Subscribe

My dad is horrible with money. He has lots of debt and for some reason, banks continue to give him loans. He never makes payments and he's always in the red. I've tried my best to keep him from getting credit cards and taking out loans but he's an adult and if the banks keep doing it, there's nothing I can do to stop them. My mother says that I'm going to be responsible for his debt but I have never co-signed anything with him or gone to the banks with him. Is it possible for me to still be responsible? Are there any steps I can take to make sure I won't be responsible?

Also, my parents are divorced, but my dad still uses our home address to take out loans. Is this a potential problem?
posted by cyml to Work & Money (27 answers total) 2 users marked this as a favorite
Given that he's your father and thus he knows your personal info, up to and possibly including your social security number, the first thing you should do is pull your credit reports and see if any of this credit has been taken out in your name, or with you as a (forged) co-signer.
posted by BlahLaLa at 8:49 PM on February 6, 2013 [42 favorites]

I should mention that he has the option of leaving the country and it is not above him to ditch his debt and shrug all responsibility. I want to know if the banks can come after me (as I'm his only grown child) or my mom for the money if he does leave.
posted by cyml at 8:49 PM on February 6, 2013

That's why you need to find out if any of this credit is in your name. If yes, then yes the banks will come after you...and if you find out that's the case you'll need to decide if you're ready to report this to the police and the credit card companies, which is what you'll have to do in order to be relieved of responsibility.

For your mom -- same thing, basically. Did he put her as a co-signer (with or without her consent?) or take out cards in her name? Does any of this debt or the accounts date to when they were married?

This is why pulling your credit report (and having her pull hers) will be an important first step.
posted by BlahLaLa at 8:53 PM on February 6, 2013 [3 favorites]

This can't be answered without knowing your jurisdiction.
posted by ripley_ at 8:54 PM on February 6, 2013 [4 favorites]

Legally, you can't be responsible for his debt (assuming you live in the US, at least). If he dies, whatever is left of his assets will have to go towards paying off the debt, but you aren't responsible for the remainder.

Make sure he's not committing identity fraud and that you aren't listed as cosigners of any of his debt on your (or your mom's) credit report, though. In which case, you need to get attorneys and probably the police involved.
posted by empath at 8:55 PM on February 6, 2013 [5 favorites]

I'm in British Columbia, Canada. I don't think any of it will be in my name because he's been largely absent from my life so he doesn't have a lot of access to our information, but I will check on that anyway. I'm mostly concerned with what happens if he were to leave the debt either because he left the country or something horrible happens and he is unable to pay. Thanks a lot!
posted by cyml at 8:58 PM on February 6, 2013

When my husband passed away he had a few debts in his name only. As there was not enough money in the estate to cover these debts, and I could prove this, the debts were wiped out by the banks.

The debt in joint names became mine, which is understandable.

If your mother is trying to say that you will inherit the debt, that is not technically correct. The estate will inherit the debt, but if there's nothing to pay it with, then too bad, so sad.

I'm sure it's different in other places around the world, but I think this is the general idea.
posted by Youremyworld at 9:08 PM on February 6, 2013 [3 favorites]

You mention he uses your home address for loans, is the house partly or fully owned in his name? If so, then it might be considered an asset that banks could come after, I would imagine. (not legal advice, I am not a lawyer).
posted by Joh at 9:19 PM on February 6, 2013 [3 favorites]

I have a friend whose parents opened multiple lines of credit in his and his brother's names when they were children. Both boys were deep in debt--on paper--before they even hit 18. Some lenders don't check applications nearly as closely as they should. Check your credit report to ensure your father hasn't been taking out loans/credit in your name! Other than that, you shouldn't automatically be liable for his debt if he disappears, though some unscrupulous debt collectors may try to convince you to pay it on his behalf.
posted by OompaLoompa at 9:59 PM on February 6, 2013 [3 favorites]

I don't know how credit reporting works in Canada, so this may be useless advice, but in the US a useful step would be to pull your credit report and make sure he hasn't created any debts in your name.

If you're clear of that, then no, you will never be legally responsible for his debts. I do know that's the same in Canada and the US. Either your mother is confusing ethical and legal responsibility (and I don't think for a second you would have any ethical responsibility to pay your father's debts!) or she is confused about Canadian law.
posted by Sidhedevil at 10:02 PM on February 6, 2013 [2 favorites]

What I'd worry about is a) as above, he might use your identity info to get loans, and b) your Mom might somehow be responsible for his debts (joint credit accounts, jointly-owned assets) and you'll have to take care of her. Otherwise, maybe ask your Mom to be more specific.
posted by amtho at 10:14 PM on February 6, 2013

My dad is horrible with money. He has lots of debt and for some reason, banks continue to give him loans. He never makes payments and he's always in the red.

This makes my spidey senses tingle. Canadian banks are pretty cautious about whom they lend money to, especially these days. Seconding everyone else who is urging you to make sure he hasn't taken out loans and credit cards in your name. I know two separate people who had close family members do this to them, both of them in British Columbia. It damaged their credit severely and was a huge pain in the ass to deal with--not to mention the psychological/emotional fallout.
posted by hurdy gurdy girl at 10:16 PM on February 6, 2013 [10 favorites]

Note: I am in the USA, and this took place in Wisconsin.

When my mother died, she had a lot of debt. She also had a lot of assets. I hired an Estate Lawyer, and she liquidated the assets (namely a condo) to pay the debts. The debts were paid in a certain order, depending on who was claiming them: the government had first dibs. Then came the funeral home, the lawyer, the doctors and hospitals, etc. The consumer debt was at the bottom of the pile.

If she had more assets than debts: all debts would be paid from the Estate, and then the beneficiaries would get the rest. Which is indeed what happened.

However, if she would have had more debt than assets: th debts would be paid in the order given above. If the Estate ran out of money before all debts were settled, those debts would be written off - they could not go after relatives or next of kin, if they're not responsible for the debt. The debtors also had a certain window in which to file claims. In our case, some tried to claim after the deadline, and they were SOL, even though there was money left in the estate.

An Estate Lawyer can help you mightily in this.
posted by spinifex23 at 11:19 PM on February 6, 2013 [3 favorites]

Note: I am in the UK, don't know about Canadian law. In the UK, in theory, debts can be recovered from the debtor's estate and that includes the house he lived in. If your mother inherits full ownership of the house, or someone else still lives there, the house can in theory be sold out from under them. So there is a theoretical risk of homelessness if you live in the house of someone who left a lot of debts, however, in the ordinary way creditors won't engage in this kind of ruthlessness.
posted by tel3path at 12:08 AM on February 7, 2013 [1 favorite]

Nthing everyone above: his debt is NOT your debt. His estate is responsible (along with any co-signers), not his heirs. If your parents are divorced then your mother too is probably in the clear; married or simply separated, though, would leave her still entangled.

But: if your father has fraudulently used you as a signer or co-signer on any of his loans, you're going to be far better off if you find about it NOW and start getting it cleared up immediately. Pull credit reports for you and your mother right away; make absolutely, 100% sure whether or not your father has committed credit fraud by using your information to include you or Mom on his loans --- and honestly, if he has? I'd call the cops and have him arrested, as part of getting your credit cleaned up. If he owns (or co-owns) the house, yes it'll probably be used to pay his debts; if he is NOT the owner, then no. Either way, it'd also probably be a really good idea if you stop letting him use the house as a mail-drop, since he doesn't actually live there.

TL;DR: Call a lawyer NOW and get this cleaned up.
posted by easily confused at 2:01 AM on February 7, 2013

I had heard things along the lines of all the responses above, but wanted to add that I heard a radio story a long time ago that even though a daughter was not responsible for her mother's debt, the credit card companies came after her and tried to get her to pay off the debt just so they would recover their money. So even if you aren't legally responsible, they might try to say you are. You could try telling them you won't fall for it, but a lawyer might be more persuasive in making sure they're not calling you incessantly.
posted by Terriniski at 3:25 AM on February 7, 2013 [6 favorites]

Seconding Terriniski: if you aren't on the credit card, you don't owe, and you don't have to pay. Credit card companies often try though --- they tried this on me after my father died --- simply because hey, what have they got to lose? And all too often, yes harassing the family does pay off for them.
posted by easily confused at 5:03 AM on February 7, 2013

Though you are in all likelihood not responsible for your father's debt, you might find collection agencies who will claim otherwise or who will try and guilt you or otherwise manipulate you into taking responsibility. So be aware and don't fall for this.
posted by Obscure Reference at 5:53 AM on February 7, 2013 [4 favorites]

You are not responsible for his debt. In the event of his death, his estate will have to pay the debt before inheritance is distributed. There are loopholes but I am not in the business of teaching people how to run out on their debt. The best thing to do is negotiate the debt with the creditors and pay it off. Creditors usually will let you give them part of what you owe and deem the bill paid.
posted by Yellow at 6:11 AM on February 7, 2013

I'd like to point out another nuance of the difference between "you" and "the estate": If you are expecting to inherit something from your father - money, a house, or sentimental things like the antique rifle that your great-grandfather used in the Civil War, or his mother's engagement ring that he keeps on his dresser - you need to be aware that those items are not "yours", they are part of "his estate". So all the creditors will get first dibs on selling that stuff to pay off his debts. You won't inherit anything unless the value of everything he owns is more than his debts. If that were true in your case (and it sounds like it's not) you might have some say in WHICH items get sold first and then you could keep the items remaining.
posted by CathyG at 8:16 AM on February 7, 2013

Here's the thing. Others are correct that debts assumed during life do not become the responsibility of one's heirs. But they do become the responsibility of the estate.

Say your dad owns a house but no other assets of consequence, and you want to keep that house in the family when he dies. Say he racks up a bunch of debt and then dies. The house and all the debts pass into the estate. So before any assets get distributed to heirs, those debts need to be satisfied. This means that in order to keep the house, you're going to need to find some other way of settling those debts, i.e., come up with the cash yourself.

In other words, if you dad is racking up debts, it's unlikely you'll stand to inherit anything from him, as you will only inherit anything if his estate's assets exceed his debts.
posted by valkyryn at 8:21 AM on February 7, 2013 [2 favorites]

My parents moved to the USA from England and my dad left a lot of debts behind. Because I took over their tenancy, I got a lot of calls from debt collectors and credit agencies.

I have the same initial and last name as my mother. My father had opened a couple of credit lines in Initial Lastname, and so a lot of those agencies assumed I was her. I had to do a lot of explaining and write a few letters. Some of those Initial Lastname debts showed up on my credit report and it took more explaining to get them removed.

Basically, I think you'll be OK as long as you haven't shared an address with your father. But definitely check out your credit report, as others are saying.
posted by vickyverky at 8:35 AM on February 7, 2013

My mom passed away in 2007 and had a bit of credit card debt. As long as the debt is in their name you are not responsible for their debt if anything happens. As someone said previously, their debt gets paid out of the estate if there is any (but life insurance goes directly to the recipient and is not used to cover debt). If the debt isn't covered by the estate, the remaining amount is wiped out as long as there weren't any cosigners on the loan.
posted by mermily at 9:09 AM on February 7, 2013

Just to show that identity theft is a real concern between family members, I read recently that approximately half of the children in California's foster system may have had their identities stolen somewhere along the line. If you have younger siblings, it might be worth checking their credit reports as well.

I don't want to sound alarmist about this -- we're reading a lot into it with very few facts. It's just a possibility that's worth thinking through carefully in this kind of situation.
posted by jhc at 11:41 AM on February 7, 2013

Oh, another thought (and this is definitely "I am not your lawyer and I know nothing about Canadian law" territory). There's probably a registry of deeds that records who owns your house and any loans that have been taken out against it and so on. It might even be searchable online.

When banks give out a loan secured by a house, they're supposed to check the registry of deeds first to make sure the person getting the loan actually owns the house. So sometimes when a homeowner knows there's a risk of fraud, they'll add a notice to the registry of deeds to let banks know what's going on before they give out any loans. It's sort of the real estate version of putting a fraud alert on your credit report. If you end up thinking there's a risk of fraud here, that might be something to look into. A real estate lawyer should be able to do it for not much money, if it's a thing that's possible where you live.
posted by jhc at 12:00 PM on February 7, 2013

I'll just point out that whether you are legally liable for his debts and whether collection agencies will try to convince you that you are liable for his debts are two different things.

(For future reference)
posted by Good Brain at 2:27 PM on February 7, 2013

Nth-ing the point that even if you are not legally responsible for a debt, debt collectors may still come after you. My mother had a department store credit card debt when she died. It should have been cancelled when she died but debt collectors still tried to get money from my dad.
posted by kat518 at 8:36 PM on February 7, 2013

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