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Which debts are inheritable in Arizona?

When Arizona residents lose a loved one, the last thing they want to think about is the debts that person has left behind, but with debt collectors threatening to circle them it may have to be the first thing that they deal with. The surprising truth is that more and more seniors are facing financial problems, and a recent study found that the fastest portion of people filing for bankruptcy is people over the age of 65. Longer lives, lack of retirement plans and increase in educational options are some of the reasons debts are soaring for this segment of the population.Unfortunately, in today's day and age Arizona residents may be struggling with their own debt and being saddled with their parents debt may be too overwhelming. The first thing that may come through their mind is, are they responsible for this debt? Different debts are dealt with differently, and it is important to know is what debt can be inherited and what to do about it.The general rule is that the decedent's estate pays off debts. This means that even though debts need to be paid back, the decedents estate is the only liable entity, and if money in the estate ends, then creditors cannot be paid back. Generally creditors cannot look outside the estate to get their debts settled, so 401(k) plans and insurance policies with a named beneficiary cannot be used to settle debts.

Arizona is a community property state that means there are exceptions to the above rule in some instances. Debts incurred by one spouse for the benefit of the whole family are considered inheritable -- this means that the surviving spouse must pay these debts back.

Losing a loved one and then dealing with their debts and creditor harassment on their behalf may be too overwhelming for some people and it is to protect debtors that the option of filing for bankruptcy exists. Chapter 7 bankruptcy not only puts an end to most debts but it also puts an end to wage garnishment and creditor harassment.

Source: NBC News, "Debt and dying: five things surviving family members need to know," Ilana Polyak, July 6, 2015