As people get older, many questions arise in regards to debt and financial security. Yet, one thing many people fail to consider, perhaps due to a fear of one’s own mortality, is what happens to debt when a person passes away. Contrary to what some people believe, it doesn’t just disappear.
What happens to the debt?
When a person passes away, their debts still need to be liquidated. In this case, the individual’s estate is typically responsible for paying. These debts may include car loans, private student loans, mortgages, and credit card debt. However, if the estate cannot cover the total amount, the remaining amount owed is usually erased. There are instances where this isn’t the case, such as if a surviving family member has consigned on any credit cards, loans, or mortgages. In this situation, that family member would be responsible for repayment. It is important to know that some creditors may hire collection agencies to harass family members for any outstanding debt. In these cases, it’s always advised to seek legal council if the harassment persists.
How to plan
None of us truly know when our time will end, but that doesn’t mean we shouldn’t plan for it. Even at a time of perfect health, measures should be taken to prepare for the worst. Appointing an executor to your estate is a good first step, as it will help alleviate confusion and the strain on close family members. The executor will be legally responsible for handling your estate and remaining assets. Since the executor is typically a close friend of family member, it is crucial that whomever is appointed is aware of the obligations involved. It can be extremely stressful and time consuming to take on another person’s financial burdens.
In the event that you don’t want someone close to you to serve as the executor of your estate, you have the option to seek out a professional. Accountants, lawyers, and trust companies are all reliable options. If you’re facing debt now, be sure to consult a lawyer about how collection will be handled in the event of your death.
There are certain steps everyone should take to ensure that their death won’t threaten the financial security of surviving loved ones. If you have questions regarding this legal matter, a Miami debt defense attorney at Graham Legal have answers. Call today for a free consultation.