Liability for Debt of Deceased Spouse

Question: My father passed away. He owes more on his car loan than market value of the car. Can we ask the bank to repossess the car? Who pays the remaining balance? My mother does not have the money to pay or make the payments.
Answer: If the only signatory is your father, there is probably no liability on the part of anyone other than his estate, if any. You should send the death certificate to the bank, inform them that no one will make further payments, and where they can get the collateral.

I say “probably” because Illinois has a Family Expense Act that creditors sometimes claim creates liability on the part of a surviving spouse. However, under the federal Equal Credit Opportunity Act, each spouse has a legal right to contract for credit without involving the other spouse, and the Federal Reserve Board has ruled that family expense statutes are preempted.