While death ends all of your beautiful earthy connections, this is not applicable for debt. If you owe cash and leave it unpaid while you are still alive, its interest will continue to snowball and needs to be taken care of.

This includes a personal loan, unsecured credit card, mortgage and others. While the way it will be paid depends on the amount and debt type, all of them shall be settled to prevent further problems or concerns.

Who Will Be Responsible For Your Debt When You Die?

When you are gone, debt responsibility will be transferred to someone else. In a typical situation, the family may rely on the deceased person’s will to see how it will be settled. In the absence of a will, your estate or your total net worth (real estate, cash, financial securities and other assets) will be used to pay off your debt.

In many cases, you might think that it’s only your immediate family members who can inherit your debt. But did you know that specific individual could inherit them, too, even if they aren’t directly related to you? These individuals are:

Your Spouse – some states may require joint property to forward all the debts to their partners. While this may sound strange, it is essential to discuss these legal matters first before acquiring properties.

  • Co-signers – As defined, a co-signer is an individual who agrees to guarantee a debt but doesn’t receive any amount from it. He can be your spouse, guardian, relative, or even a friend. While a co-signer does not receive any debt proceeds, he has an equal responsibility for it, including when uncertain events happen.
  • Joint Account Holders – Once you open a bank account with another individual and apply for a loan, you have equal responsibilities over it, including when one of you passed away.
  • Estate Executors – Estate executors are appointed individuals to your last will and testament. While they are not generally liable to your debt, they will be responsible if they are found to be careless in managing your debt before distributing your remaining assets to the beneficiaries.

Different Type of Debts Than Can Be Inherited

As mentioned, some debts can be inherited depending on different factors. Here are some:

  • Mortgage – A mortgage is a type of secured loan that is used to finance a property. With a secured loan, the borrower provides collateral to the lender if the borrower loses the ability to make payments.

    For an auto loan, your estate can be used to pay off any remaining balance if you have no co-signer when you pass away.

    For a home loan, your estate may also be responsible for covering the remaining balance. Otherwise, if you leave the property to someone else, he will be held accountable for future payments.
  • Student Loans – The estate cannot pay off the remaining loan balance for student loans, which is commonly an unsecured debt. Some lenders require a co-signer for this type of loan, wherein they may be held responsible when you pass away.
  • Medical Bills – Medical loans are commonly applied for immediate uses. It reduces the financial burden of the applicant because this loan can be approved and received in less than ten minutes. The borrower also doesn’t need to be physically present. Online submission together with the Identification Card is already accepted.

    Similar to other debts, your estate may also pay for your outstanding medical bill debt. Otherwise, it will be paid by a co-signer. There are also times that the lender applies filial responsibility, which means adult children will be responsible for supporting their parents if they can’t afford to support themselves.
  • Credit Card Debt – Since credit card debt is unsecured debt, there are only two ways to settle it when you die. The first is through your estate.

    If you open a joint account, your partner will be responsible for the succeeding payments.

Becoming Responsible With Your Debt

Death is inevitable and an unforeseen event. While many of us are not yet responsive or open to this topic, discussing it matters before applying for a loan. Remember that when you pass away, it’s no longer about you. Whatever you leave, including your debt, will become about your family and your loved ones.


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