If somebody doesn't pay off a debt, should his relatives be responsible for it?

The discussion in the other thread about people who took out mortgages they could not afford, how mortgage companies gave them out, and the like made me think of a somewhat similar question from a long time ago on the CHB.

For background, many many years ago on the old CHB there was a poster named Jeff Freeman who ran a computer business in the Atlanta area. He said all of this publicly, so I am not saying anything private. He was very no-nonsense and did not suffer fools as customers, and he was really big on personal responsibility. Having just gotten out of retail where I had seen my share of customers who were full of it, I don’t mind saying that I agreed with him far more often than not and respected him a lot.

That is why one thing that he said later on absolutely floored me. He said that if a business lent money to a person and the person did not pay it back, the person’s relatives have an obligation to pay it back. To be clear, he never said they had a legal obligation, but he felt they had a moral obligation. I totally disagreed with him on this.

As we discussed it, at one point he asked about the poor businessman and why he should be left holding the bag when the customer welched on his loan. My answer was that he as the businessman had made the business decision to extend credit to this person and had taken on the associated risk with it. That transaction was between the businessman and customer only, and none of the customer’s relatives were part of it. Yet, rather than accept responsibility for the risk he took when he extended credit, he wanted to pass it onto the deadbeat’s relatives so that he didn’t lose anything.

If that standard applied, business people would be extending credit to just about anybody knowing that they could find some responsible relative to stick with the debt if the customer defaulted. I recall asking him how he would feel if one of his relatives defaulted on a loan and the bank came to him and told him to pay up. As I recall, he didn’t give a straight answer.

I also told him that if he ever came to me telling me that I needed to pay a debt that one of my deadbeat relatives owed him, my reply would be that unless he had something showing I had co-signed or guaranteed that debt then he could take his “request” and stick it where the sun don’t shine.

Now, in the interest of fairness, I do remember one poster replying that one of her relatives had defaulted on a debt and her family had taken it upon themselves to pay it off. They felt it reflected on them as a family and they had that obligation. I disagreed with her rationale, but that was her opinion and her decision.

So, with said, does anybody have any thoughts on whether obligations to pay off debts should extend to relatives?

This is a very interesting question and in most situations I would say no. However, if a person could not afford to pay off a debt because he gave a substantial amount of money to a relative, I think that relative should be responsible for paying it off.

Thank you for your reply :slight_smile:

This reminds me of time a while back where a GoFundMe request was forwarded. To paraphrase, the person said that her parents had helped her out to buy a house. Now, since her parents needed help and she could not help them financially, she was starting that GoFundMe page. I did not personally know any of the people involved, and let’s just say I was not motivated to contribute to it.

Edit: To add to your point, I agree with your premise but would say that that is between the customer and his relative and the obligations between the two. The business owner has no basis to go the relative and “request” that he pay back the debt.

Edit 2: I do remember him saying that if he knew of a relative who could pay off a deadbeat’s debt, he would go to the relative and threaten to take action against the deadbeat if the debt wasn’t paid off and that the relative could prevent this. He did acknowledge that he had no legal course of action against the relative.

They should not. The lender took the risk of the loan and the borrower took the obligation to repay.

That said, such a loan should be in writing. If it is in writing, that unpaid debt will be an unsecured debt of the borrower’s estate. So, if estate funds are available to repay, the estate should repay the debt before distributing any assets. I would have no problem if the lender filed a claim and sued if was not paid when funds were available.

I hope this means that smart minds think alike. :smiley:

Seriously, many years ago when I was younger I lent money to somebody who ended up not repaying me. I never once thought of asking any of this person’s relatives to pay me back for this guy.

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They have an obligation if there are assets left in the estate. Otherwise, no. No moral or Legal obligation

This discussion never got to the point where the deadbeat had passed on. Rather, it was on the immediate time, as in, “I extended credit to your deadbeat relative and he isn’t paying me and want you to pay his debt off for me.”

If you’re curious this comes from the white trash code.

Generally speaking, the answer is no. The exception would be that if the person who didn’t pay died, their relatives aren’t responsible for the debt, but if there’s an estate to be inherited, it would likely come out first.

To turn the tables a bit. Everybody says that it was the borrowers fault if they didn’t read a loan agreement and were surprised when the rate changed and they couldn’t afford it. Fine. So if a business looks at a customer and extends them credit, then it’s their fault if they didn’t research that borrowers ability to pay it back. HIs family had nothing to do with them getting the loan (assuming nobody cosigned).

Everybody says ??

Sometimes it feels that way. How about “most of the conservative posters on this board” says.

On second thought, no…everybody seems to say that ultimately it was the borrowers fault for not reading the legalese in the loan docs before they signed the papers, so therefore, they are responsible for getting into a loan they couldn’t afford or shouldn’t have been given…they might slip in a 'the lender was a weasle", but the responsibility seems to land directly on the borrowers shoulders.

KC - Nobody is saying that the mortgage broker was innocent of wrong doing when he told that woman to lie about her dead husband’s income on her mortgage application. What we are saying is that the woman committed fraud by listing the income that her dead husband made while he was alive as if she was still receiving that income. Committing a crime because someone told you to do it does not make it less of a crime.

It is not uncommon for a sales person to lie in order to make a sale, but everyone is responsible for what they actually do!

I’m not talking about that specific case. I am talking about the person who was lured in to a teaser rate by a broker who knew that once it adjusted the first time, the borrower wouldn’t be able to afford it.

I still maintain taht in the good old days, a banker would tell the person they couldn’t afford it and wouldn’t look for a way to make it affordable for a few years before putting the screws to them. But that was no longer expected of mortgage brokers, so the person who DIDN’T lie but was suckered in to a loan they couldn’t afford is blamed for not reading the legalese in the document. So in the case of this OP, the business owner should have done a better job of determining the creditworthiness of the borrower and not try to get the money from the borrowers family (unless one of them was foolish enough to cosign)

This is how I would expect it would play out.


My thoughts exactly.

There is no legal or moral obligation for family to pay off a bad debt.

Ancestors are dead, by definition. It’s not legally or logistically possible for a state to hold them responsible for anything, being all dead and all.

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I wonder about falial laws


Those are putting the responsibility on adult living children, the opposite of ancestors.

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