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My mom's cousin Larry passed away earlier this year. He wasn't in touch with any family for the later part of his life, but when he became ill, he contacted my mom and she did a lot of work to help him.

Larry owned a house that was condemned. After he died, the city auctioned the property to pay outstanding debts owed to the city. After this was done, there was $8,000 left.

Now the city is contacting my mom (she is the only contact) and asking her what to do with this left over $8,000 and if she wants to go through probate (Larry died without a will).

We know that Larry died with debts larger than $8,000.

What should my mom do? If she does the probate process, will the debt collectors find out about it and take the money? It doesn't seem worth her time to do the probate process to help the debt collectors.

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There's a crap-shoot aspect here. If the person assigned to probate the estate is aggressively doing their job, they'll easily find the debt holders and divvy up the money. If they simply place a 'public notice' and wait the standard 30 days (?) mom may get something if no one replies. The cost of probate comes from the estate, mom should not be paying any of that cost, so she has nothing to lose by saying, "sure, send it through probate."

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    Do you know if debt collectors could come after my mom after the probate process is finished? Or is it then too late and a done deal?
    – minou
    Commented Dec 16, 2016 at 18:23
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    @Jeff O'Neill: IANAL, but to the best of my knowledge, debts aren't inherited, so (unless she co-signed something) debt collectors can't come after your mom for cousin Larry's debts.
    – jamesqf
    Commented Dec 16, 2016 at 18:41
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    No, non-cosigners are not responsible for debt. But specifically, probate is literally their chance to recoup the debt. If the court deems the time has passed, credit card or other debt holders legally missed their chance.
    – JTP - Apologise to Monica ♦
    Commented Dec 16, 2016 at 19:21
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    If OP's mom does not say "Sure, send it through probate," what are the other options? (I know nothing about this topic.)
    – Ben Miller
    Commented Dec 16, 2016 at 21:02
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    It would likely find its way to the state as unclaimed money. I know that the admin of a probated estate can take a fee, and it's often a number, say $500, plus a percent. On $8000, a chunk is lost to the probate process. This is part of the reason Named Beneficiaries are better than wills for inheriting assets.
    – JTP - Apologise to Monica ♦
    Commented Dec 16, 2016 at 21:06
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"What should your mom do?" Inform the probate court of the known outstanding debts, and let the court do the right thing: Pay the outstanding debt. She has no legal claim on it.

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    If there's no will, and therefore no way that mom is the executor of the estate, she's under no obligation to do anything. Doing the "right thing" could just as easily be minding her own business.
    – Rocky
    Commented Dec 16, 2016 at 20:55
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    We live in interesting times. A billionaire sets up 100 separate businesses, no personal liability, and can bankrupt the losers, but let the winners run. This is business, and isn't just the current law, it's a bragging right. An individual in line for a potential few thousand dollars should report known debts to the court to aid the debtors to take these funds? You get +1 for the ethics I wish we all had, including the unnamed billionaires, but I do believe, this is literally "not her job" nor ethical responsibility.
    – JTP - Apologise to Monica ♦
    Commented Dec 16, 2016 at 20:55

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