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  #3 (permalink)
: yes.

the required order of use of funds and assets in most states is: taxes, attorney [Executor's fee], costs of final illness, funeral, and then creditors. Except that the mortgage holder has first call on the value of the house and the lien holder on the car similarly has first call on its value. unsecured creditors, however, can force the sale of either or both the house and car in order to apply the net proceeds [after the lien holder with first call is paid off] to settle their claims.

heirs receive nothing until after all debts are paid or extended. note that extension of the mortgage is usually automatic, but the car loan may require payment in full if the obligated person has died.

aside to "Uncle Joe" above -- the Executor is legally bound to do his job as the law requires. If he fails to do so, he can be personally sued by the creditors who were not paid. this opens up another pot of money beyond the wholesale value of the car or distress sale value of the house or funds in the estate. creditor would also ask the court to award them attorney's fees, so the Executor who doesn't do his job correctly ends up losing completely and, quite possibly, out of his own pocket.
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