What do you do when a relative dies and you owe tons?

We have all heard only two things that guarantee life. Death and taxes. Well, maybe we can add credit to that list; Debt, death and taxes or DDT for short? “DDT – is it really that bad,” you ask. It could be.

Did you know that many people who go to a better place save money? it’s true. What an old saying; “You can’t take it with you!” Does that make sense? You can’t take your assets, so you can’t take your loans either. So what happens to all these debts left on Earth? Well, it turns out to be a really interesting topic. So let’s discuss this, shall we?

How often do people die with significant debt?

Nearly 75% of Americans who die today save on debt. The average unpaid amount, including home loans, is close to $ 13,000. If we included the mortgage, the debt would be about $ 61,500. Nearly 70% of Americans who died in 2018 had credit card debt. 25% of those who died had to pay off auto loans. According to Experian and credit.com, an increasing number every year appear to account for 6% of student debt.

Do these statistics surprise you? They should not. The average person has literally no savings, only a car loan and a credit card loan of about $ 10,000. Many people do not fully own their smartphone instead of paying monthly on their mobile phone service bill. If this is you, you are the majority and still considered the middle class. You should not be surprised when someone you love passes by and finds out that they are in the same boat you are in right now.

Who is responsible for all these debts when someone dies?

Don’t worry, the heirs are usually not the ones who have to pay the debt now. The estate of the deceased is now liable for the debt. However, this can have a very positive effect on your inheritance as creditors pay first. There are rules for settling an estate, and there are rules for determining how much to pay for a loan against that estate. Much of this depends on the state in which the deceased claims to be residing, the total value of the estate and the outstanding debts.

If a person dies in debt beyond his means, the heir can ‘refuse to accept’ their inheritance and, accordingly, will not receive the money, but will not be liable for any debt. On the other hand, if someone dies and they have more assets than liabilities, sometimes some of those assets have to be sold to pay off debts. In this case, the heirs will receive a difference (reduction of administrative costs for the implementation of estates and taxes payable).

Needless to say, it makes sense to have a will and a plan before you die. Of course, this is not always how things work, because no one knows how they will ever die.

What to do if your spouse dies – do you have to pay their debts?

Well, in the case of a surviving spouse, it becomes a completely different situation. Again, where you live is important, for example, a ‘community property’ state. In such cases, even if the debt is only in the name of your spouse, and the debt was assumed at the time of the marriage, you may be liable for it.

Surviving family members will often find it a little difficult to pay off debtors. Borrowers can hire a collection agency to collect the debt. It can be a problem when you are already in an emotional state, even if you are not responsible, they will try to commit you to pay off the debt that needs to be paid.

If you feel pressured to pay off a loan that you do not believe you owe, you should seek the help of a lawyer who knows the law and can help you explain your rights. There are law firms to help.

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