- When an individual dies, his estate representative must inform his creditors of his death, and the creditors can file claims against the estate for debt repayment. The estate administrator must pay debts in order of importance as determined by the state. If there aren't enough assets in the deceased individual's estate to cover all of the debts, the court will designate the estate as insolvent, and the remaining creditors won't receive payment.
- If the surviving spouse owns her own home, it won't go into probate with the rest of the estate. In most states, the home will be exempt from probate even if she owned it jointly with her husband. However, in some states, the deceased spouse's interest in the home may become part of his estate if the deed doesn't provide the surviving spouse with the right of survivorship. If the deceased spouse's interest in the home does pass into the estate, creditors may be able to attach to it.
- If creditors are attempting to collect a debt that both spouses owed and the deceased spouse's estate is insolvent, the creditors can continue to take action against the surviving spouse after the completion of probate. If the couple pledged their home as collateral for a debt, creditors can take possession of it. However, other creditors must obtain a judgment before they can put a lien on the home or force its sale.
- Though creditors may be able to attach to a deceased spouse's interest in a jointly owned home, they can't typically force the sale of the home unless the surviving spouse was also responsible for the debt. If she was responsible for the debt, she can file a homestead exemption to protect a portion of her equity.
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