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What Happens to Your Debt When You Die


Salty Dog

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Salty Dog
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What Happens to Your Debt When You Die

Know what you owe and what you don’t

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 Almost everyone dies owing at least some debt. Sometimes it’s only last month’s ordinary bills plus final medical expenses. But there can be shocking surprises for survivors — debts unknown to the children and even to the spouse of the deceased. Heirs might discover large credit card balances, undisclosed home equity loans or gambling debts.

Creditors are entitled to payment, from the money and property (the “estate”) that your loved one left behind. But what if he or she didn’t leave enough to get everyone repaid? Can the creditors come after you?

Sometimes yes, sometimes no. With loans secured by property, such as mortgages, an heir has to keep up the monthly payments or else sell the property to cover the debt. Unsecured loans, such as credit card debt and student loans, are another matter. Your liability depends very much on the nature of the bill, the type of property and your state’s laws. But here’s what I can say, generally.

  • Some money is protected. At death, unsecured creditors cannot collect from life insurance payments, pay-on-death bank or brokerage accounts, jointly held property that passes directly to the surviving owner, or retirement plans such as 401(k)s and IRAs that have named beneficiaries, says IRA expert Ed Slott of IRAhelp.com. They’re safe — but only if they were handled right. By “right,” I mean that the deceased filled out a beneficiary form for each account, naming the people who were to inherit. If this step was skipped, the funds will be paid into the estate, where they can be used to satisfy the creditors.
  • Your signature matters. If you signed a joint application for a credit card, you owe the balance even if you didn’t know how high it had grown. If you were merely an “authorized user,” however, most states don’t require you to pay. (Note that authorized users shouldn’t use the card after the owner dies if the estate is broke. Such spending could be considered fraud.) Spouses are generally not liable for any separate debts their mate incurred before the wedding or, in most cases, after. Rules in community property states, such as Texas and California, are different. Your community property can generally be tapped to pay a spouse’s debts. But creditors can’t take your separate property, says Cathy Moran, an attorney in Mountain View, Calif. In any state, you’ll still owe any private debt you cosigned with the deceased, such as a student loan. Some private student lenders will forgive the loan, but most won’t.
  • You have to pay the doctor. Final medical bills are usually considered a spouse’s responsibility. If your mate entered a hospital, the admission papers you signed probably included a payment agreement. When there’s no money, however, and the survivor has very little income, health providers might write off the account.
  • Get tough. Don’t be talked into making a few payments on bills you do not owe. Creditors might claim that you willingly assumed the debt. Tell them, “No, no, never.” You know your rights. 

https://www.aarp.org/money/credit-loans-debt/info-2018/debt-after-death1.html?intcmp=Outbrain&obref=obnetwork

 

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mikewright

It's usually pretty straight forward. When you fall off the perch your executor uses your assets to pay burial expenses, then all your debts. What's left over goes to your beneficiaries.

Obviously, if you don't have enough to pay for your funeral, you can't afford to die yet.

If you can leave enough for funeral expenses, but not for your creditors, you are living the dream of some, spending everything before you go . What happens next won't matter, you won't be there, and your family ain't getting anything anyway.

If you're looking after family or other beneficiaries, you would have already looked into Dog's good info when having your Will drawn up by a lawyer.

Particularly if looking at assets in different legal jurisdictions.

 

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musicman666

They sell your debt to the heavenly body collection agency ....for them it’s easy as you only have two possible locations. 

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mikewright
10 minutes ago, musicman666 said:

They sell your debt to the heavenly body collection agency ....for them it’s easy as you only have two possible locations. 

Limbo and purgatory? Good luck in collecting in other jurisdictions :lol:.

Edited by mikewright
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Dafey
9 hours ago, mikewright said:

Obviously, if you don't have enough to pay for your funeral, you can't afford to die yet.

 :rofl:

What Happens to Your Debt When You Die? Who Cares???

Seriously, when I die My wife will win a small lottery! (Don't tell her family!)

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lamoe
9 hours ago, mikewright said:

If you're looking after family or other beneficiaries, you would have already looked into Dog's good info when having your Will drawn up by a lawyer.

Particularly if looking at assets in different legal jurisdictions.

 

Owe nothing other than  monthly  expenses here, all my assets (except  condo furniture / appliances) are under a trust fund  - including 401s, stocks, property, etc.

VA does have  burial benefits here - what are they? Googled not specific - tried office closed - 12 hour dif

https://www.usa.gov/chat

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shadow
59 minutes ago, Dafey said:

 :rofl:

What Happens to Your Debt When You Die? Who Cares???

Seriously, when I die My wife will win a small lottery! (Don't tell her family!)

 

This has definitely become a huge concern of mine, of late. If I were to die today, my wife would inherit about P200,000 in debt, and be left with an income of less than P10,000. This year has been a financial disaster for us, one of our worst ever. I had a heart attack in March (my second) and we borrowed P120,000. Shortly thereafter USCIS announced they were closing the Manila office, which brought an abrupt end to the vast majority of our income, DCF filings. Since then, we have had only one new visa client, and the occasional process service. Other than that, we are now living on money earned from salsa sales and gig money from the wife's singing. Since March 1, that has been about P60,000 total. Now, we struggle every month to pay the monthly bills, which luckily are small. Netflix and Skype were shut off earlier this week. Other payments are due by the end of the week. The P120,000 is due in August.

Yes, I care, and I worry about her. We are scrambling now trying to come up with another source of income, that we can get into with no up front investment. It's been well over a decade since we have been this financially desperate.

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Damn Shadow, sorry to hear. :sad_01:  Good luck, I hope that another revenue stream shows itself soon for you. 

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Dafey
1 hour ago, shadow said:

I had a heart attack in March

How are you now brother?

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shadow
1 hour ago, Dafey said:

How are you now brother?

Ok, I lost 25 pounds, so I feel a lot better than I did a year ago.

Getting rid of the doctor induced gout was much more troublesome and stressful than the heart attack. I got over the heart attack in 2 days, it took a month to get over the gout induced by the diuretic given me at the hospital, which they continued to feed me for three days after they knew it was giving me the gout.

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cookie47

Well hopefully you improve both medicely and socially. I know I'm only someone with a username but I'm wishing you all the best. 

I've haven't had a gout flair up for over 12 months. Now I don't know if taking Moringa seeds or infusing in soup has helped but the internet is awash with what it can do. However I'm not telling you to take it Persay as I have no background to do that, particularly if your on prescribed medication. You probably know what not to eat.... but I've included a list of what not to eat below. 

Several types of foods are animal-based and have high content of purines such as liver, liver, spleen, tripe), livestock (beef, horse meat and mutton), processed (corned beef, sardines, beef jerky, etc.), poultry duck meat, turkey and also goose), seafood (crab, shrimp, sardines, clams, etc.).

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shadow
1 hour ago, cookie47 said:

Well hopefully you improve both medicely and socially. I know I'm only someone with a username but I'm wishing you all the best. 

I've haven't had a gout flair up for over 12 months. Now I don't know if taking Moringa seeds or infusing in soup has helped but the internet is awash with what it can do. However I'm not telling you to take it Persay as I have no background to do that, particularly if your on prescribed medication. You probably know what not to eat.... but I've included a list of what not to eat below. 

Several types of foods are animal-based and have high content of purines such as liver, liver, spleen, tripe), livestock (beef, horse meat and mutton), processed (corned beef, sardines, beef jerky, etc.), poultry duck meat, turkey and also goose), seafood (crab, shrimp, sardines, clams, etc.).

I very seldom get gout, this was brought on by the meds fed to me at the hospital, which continued for days after my knees became the size of cantaloupes.

This is all off topic. I just wanted to express that I am very concerned about the debt I will likely be leaving behind for my wife. We will survive in the meantime, our expenses are very low.

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Semper paratus
4 hours ago, shadow said:

Ok, I lost 25 pounds, so I feel a lot better than I did a year ago.

Getting rid of the doctor induced gout was much more troublesome and stressful than the heart attack. I got over the heart attack in 2 days, it took a month to get over the gout induced by the diuretic given me at the hospital, which they continued to feed me for three days after they knew it was giving me the gout.

Take care, don't trust any doctor 100%. Two years ago I was put on 3 meds by a doctor at Silliman for B/P ? and cholesterol.  All meds have some sort of side effects by the way. Anyhow I was always suspicious, this guy even wanted to admit me. B.S., it's all about money. I told him no way. So I got the meds and took for over a year, but was never comfortable with his diagnosis. So I got another set of blood tests and went to a Doctor at at Holy Child. He said, hey quit taking that cholesterol medicine, you surely don't need it and it has too many possible side effects. The after several more months I thought there is something not right about this blood thinner the first guy put me on. So I went to see another Doc we have known for a long time, I again got new blood work before seeing him. He looked at all previous tests and whatnot and said get off that blood thinner, it's to dangerous for you.   he was also suspicious of the med to slow my heartbeat, and wanted new blood work in 3 months which I'll do this month.. Now I am down to one med that slows the heartbeat. It looks to me like it's border line too slow, so I'll get tested again and see my old time Doc. Too much of this medical crap is about money. I wonder what the diagnosis would be and meds prescribed would be if there was no connection to money. Personally I read a lot about any medical stuff that may affect me and I am the one to make the final decision. I say always get 2-3 opinions, then you decide. Remember, doctors and hospitals bury their mistakes. Now of course they at=are not all bad and do some great things, but, proceed with caution, resd, study, get other opinions and you decide. I am betting after the next tests and doctor visit I will be off all meds.  What a waste of my money and time. But i learned a lot.  Cheers,

And of course, eat right, exercise, and avoid stress when possible, " Don't let the old man in." 

Edited by Semper paratus
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Jack Rat
12 minutes ago, Semper paratus said:

Take care, don't trust any doctor 100%. Two years ago I was put on 3 meds by a doctor at Silliman for B/P ? and cholesterol.  All meds have some sort of side effects by the way. Anyhow I was always suspicious, this guy even wanted to admit me. B.S., it's all about money. I told him no way. So I got the meds and took for over a year, but was never comfortable with his diagnosis. So I got another set of blood tests and went to a Doctor at at Holy Child. He said, hey quit taking that cholesterol medicine, you surely don't need it and it has too many possible side effects. The after several more months I thought there is something not right about this blood thinner the first guy put me on. So I went to see another Doc we have known for a long time, I again got new blood work before seeing him. He looked at all previous tests and whatnot and said get off that blood thinner, it's to dangerous for you.   he was also suspicious of the med to slow my heartbeat, and wanted new blood work in 3 months which I'll do this month.. Now I am down to one med that slows the heartbeat. It looks to me like it's border line too slow, so I'll get tested again and see my old time Doc. Too much of this medical crap is about money. I wonder what the diagnosis would be and meds prescribed would be if there was no connection to money. Personally I read a lot about any medical stuff that may affect me and I am the one to make the final decision. I say always get 2-3 opinions, then you decide. Remember, doctors and hospitals bury their mistakes. Now of course they at=are not all bad and do some great things, but, proceed with caution, resd, study, get other opinions and you decide. I am betting after the next tests and doctor visit I will be off all meds.  What a waste of my money and time. But i learned a lot.  Cheers,

And of course, eat right, exercise, and avoid stress when possible, " Don't let the old man in." 

Yes it is often only about money.. Many doctors are totally incompetent and avoid taking responsibility, so one can end up be pushed from one so called doctor/specialist to another. In saying that there are also many very good doctors also, but finding the right one, particularly for newbies, can be frustrating and time consuming.  I am fortunate to have a doctor who was trained and has practiced offshore for many years.  

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Jawny

Are the only debts we are speaking about medical debts?  Debt collection here is not exactly like in other places nor are all debts from getting poor medical care. Bank accounts can be frozen, vehicles repossessed, survivor annuities delayed, etc.   

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