Have you always wondered what happens to a person’s debt when they pass away? There is no simple answer to this, as laws may vary by state (such as whether or not you live in a community property state), type of debt, and other details.
Credit card debt
This may be dependent upon whose name is on the account. If there is only one name on that account and the individual passes away, their estate may be liable for the debt. In other words, if someone inherits the debtor’s assets, those assets may have to be liquidated in order to first satisfy the debt. If someone else’s name is tied to that account, he or she may be responsible for paying it off, regardless of an inheritance.
This will usually depend on the type of student loan. If it is federal student loan debt, the remaining debt may be forgiven. However, with private student loan debt, the survivors (such as the spouse) may be responsible for paying back the debt.
What to know about forgiven debt
Bear in mind that if a debt is forgiven due to death, there may still be tax liabilities.
In the end, if you have any questions about your debt or a loved one’s debt, it can be beneficial to speak with a lawyer or financial advisor in your area who specializes in this practice area. Doing so can help you and your family prepare financially.
Do you have large amounts of debt to pay off, but you don’t have the cash to do so? If you need extra money and you’re the recipient of an annuity or structured settlement payment stream, we can help! Contact Peachtree Financial Solutions today to learn more about how you can sell some or all of your future payments and receive a lump sum of cash. The money you receive from Peachtree can be used to help eliminate some or all of your debt or a loved one’s debt.
Nothing above is meant to provide financial or tax advice. You should meet with appropriate professionals for such services.