What happens to a person's debt when they die?

Question

Accepted Answer

Under Arizona law, a person's debts do not simply vanish at death — they become claims against the decedent's estate, and the estate's property passes to heirs or devisees subject to the rights of creditors .

How debts are collected from the estate:

- When a personal representative is appointed, they must publish a notice to creditors in a newspaper once a week for three successive weeks, and creditors must present their claims within four months after the first publication or be forever barred . Known creditors must also receive written notice, and they must present claims within four months after the published notice or within sixty days after the mailed notice, whichever is later, or be forever barred .
- Even without notice, all claims arising before death are barred against the estate, the personal representative, and the heirs and devisees unless presented within two years after the decedent's death (plus any remaining notice period) .
- If the estate's assets are insufficient to pay all claims in full, the personal representative must pay in a set order: (1) costs and expenses of administration, (2) reasonable funeral expenses, (3) debts and taxes preferred under federal law, (4) reasonable and necessary medical and hospital expenses of the last illness, (5) debts and taxes preferred under Arizona law, and (6) all other claims . No preference is given among claims of the same class .
- Property the decedent transferred in a way that is void or voidable as to creditors (including fraudulent conveyances) can be recovered by the personal representative to pay unsecured debts .

Protection for heirs and survivors:

- Because unpresented claims are barred against heirs and devisees, heirs generally do not personally inherit the decedent's debts — the sources describe creditors' recourse as being against the estate and its property .
- Amounts recovered in a wrongful death action are not subject to the debts or liabilities of the deceased, unless the action is brought on behalf of the decedent's estate .
- If a patient dies while being treated with an individualized investigational drug, biological product, or device, the patient's heirs are not liable for any outstanding debt related to that treatment .

Note on scope: The provided sources do not address every situation — for example, they do not cover jointly held debts, co-signed loans, or a surviving spouse's liability for community debts beyond noting that the surviving spouse's share of community property is subject to administration until the claims period expires and thereafter only to the extent necessary to pay community claims . For questions about those situations, consult a licensed Arizona attorney.