Blog
Oct
Nearly 80 percent of Americans carry some form of debt. It’s common: Student loans, credit cards, auto loans, medical expenses, and mortgages. Chances are, you have at least one of those five types. Some of them are expected and budgeted for, while others are not and can put a major strain on family finances.
What happens to your debt if you pass away? The short answer: It depends.
If your total debts add up to be less than the value of your estate, then your estate pays off your remaining debt – and whatever remains goes to those listed in your estate plan.
For those with more debt than their estate’s value, federal and state laws become factors. They determine who gets paid in full, who gets paid a partial amount, and who has to write off the bad debt. The appointed estate representative takes care of ensuring those payments are made.
There are federal laws in place that give you rights if debt collectors come calling regarding a recently-deceased’s remaining balances. Information can be found at http://www.consumer.ftc.gov/articles/0081-debts-and-deceased-relatives.
For more information, contact us with your questions, or sign up for one of our workshops today.