The average American dies with an average of over $60,000 in debt. The most common form of debt carried by the deceased is credit card debt, followed by mortgage debt, auto loans, personal loans, and student loans. Many people will die with a combination of multiple debts. Some of your debt will disappear when you die, but not all of it. The debt that remains will be tied to your estate and the beneficiaries you have allotted your assets to in your will. The remaining assets you possess will be taken to repay creditors. It is common to believe that family members would have to repay the debt, but often this is not the case. Different kinds of debt determine how it is handled when you die. Keep reading below to see how your debt may be handled when the time comes.
How debt of the deceased is handled
- What kind of debt is it? Is it mortgage debt? If your mortgage is unpaid and you have a family, they will have to start paying the mortgage or they will need to sell the home to repay creditors. Student loan debt is dismissed upon death if it is from a federal student loan program, but private student loan companies usually will not dismiss it.
- Do you have life insurance? life insurance is often overlooked as a serious help to your family members and estate. Getting life insurance earlier in life will cause you to pay less on your annual premium payments because you’re less of a health liability. The more money you have covered in the plan, the better. Your family could invest your life insurance funds and continue to make more money off of them every year.
- Who are your beneficiaries? Do you have a will drafted? You get to decide who gets your assets when you die, however, if you don’t have a will, state law will choose. That decision is based on what’s best for them, not the people closest to you.
It is difficult to think about your death, but your debt could be an extreme burden on the ones you love If you do not plan ahead. Take some time to draft a will, think about life insurance coverage, and know the terms set by the debt providers you use for how they will treat the debt if you are to perish. Texas debt settlement attorneys at Shuster Law, PLLC want to help you get your debt under control.