Q: my father passed feb 2016. He was broke/no cash.The house is paid.does the house have to be sold to pay unsecured debt?
he did not have any cash in the bank. the house and car are paid. the only debt may have father had/has is unsecured all credit cards. i live in the house now and I pay all the expenses. there are 3 heirs, my brother, my sister, and myself. we are all in agreement the house will be sold and split 3 ways at some point. the house needs some work that will done by the 3 of us. we were told by the court that we do not need a lawyer. my sister is my fathers personal representative. does the house have to sold to pay the unsecured debt? we were told that an estate attorney is paid out of the estate. the estate does not have any money unless the house is sold. my confusion is the debt is unsecured. there is no cash in the bank. there was very little when he passed not even enough to cover the services. the house was not used for collateral to get the credit cards. i don't understand why the house would have to be sold to pay unsecured debt?
A: You've left out important facts, like whether there is a Will; who all the heirs or beneficiaries are; whether they agree that you should be the sole beneficiary; the value of your father's house after payment of expenses and mortgages; and whether you could buy something else with your share of the proceeds; and how you're going to pay a lawyer to cut through to a solution.
A:
"does the house have to sold to pay the unsecured debt?"
An estate must pay legally enforceable debts, whether secured or unsecured, before disbursing assets. So if, theoretically speaking, someone died with $100,000 in valid debts enforceable against their estate and had property worth $300,000, the property would need to be sold to pay off the debts, with the balance distributed to heirs.
"we were told that an estate attorney is paid out of the estate....the estate does not have any money unless the house is sold."
This situation happens somewhat regularly. Yes, typically an estate attorney gets paid after the assets sell. The PR generally has the option of either allowing one or more of the heirs to "buy out" the house and pay whatever debts/expenses exist in the estate or sell the asset to a third party to cover the debts. The law gives an order of priority to pay bills in an estate and it would be well advised to consult with a lawyer before disbursing the property.
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