Do debts die with the debtor’s death?

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We talk about debts and discuss how to get rid of them for long hours. But we tend to over look a very vital question- If a debtor dies, what will happen to his debts? We, the lovers of life dread the appalling thought of death. So we choose not to ponder over what might happen to our debts if we die. But, considering the unpredictable nature of life, it is rational for you and your dear ones to learn when you are and when you are not liable for one another’s obligations. Debts of a deceased person will be guided by 3 questions: •Did he/she have a will? •Was he/she married? •Did he/she live in a community property state? If a person has a will, then after his/her demise, his/her property and debts will be handled by the executor as per the will. The executor will determine in which order the debts need to be paid off. Usually unsecured creditors are paid off if enough money is available from the property; they may not be paid at all if deceased debtor was sole open account user or sole signer of the credit application and his/her property is inadequate to satisfy the unsecured debts. If the deceased person was a resident of a community property state, then the debts left behind by him will be automatically become the responsibility of the deceased’s spouse, irrespective of whether is any will or not. The spouse will assume responsibility even if he/she was not co-signer on any account or agreement. However, there will be some exceptions to this, if the deceased’s property is insufficient to pay off the secured creditors or if a large share of the property and funds value is in such things as a 40(k) retirement plan, a primary residence, brokerage accounts and some kinds of insurance. If the dead person did not have a will and did not have a living spouse, then the state law appoints a close relative (son, daughter, mother, father, or a grandparent/grandchild) as the executor of the property. But, if there are no relatives, then state appoints an executor. Cosigner’s Role Anyone who had co-signed any loan or credit agreement (secured or unsecured) with the deceased person and the deceased had not paid off those obligations before demise then the co-signer will be obligated to pay off the debts. But often the cosigner’s role is decided by the terms and conditions of the agreement and also by the creditor. If the creditor thinks it is better to cancel the debt account after a cosigner dies, the creditor may do that. Also the creditor can grant the living co-signer some time to look for a new cosigner. The creditor may also require the full payment of the obligation almost immediately after a cosigner’s demise. Debt and Inheritance If a parent has bequeathed all the his/her property along with consumer debts to his/her children, then the children will be legally responsible for the repayment of the debts before claiming their inheritance. Things you should keep in mind Mourning family members of a deceased debtor happen to be the most vulnerable victims of fraudulent creditors. Such creditors hoax the bereaved people into paying money they do not even owe. Death of a loved one is indeed shocking and the pain is overwhelming. The last you would want to do after his/her funeral is deal and discuss finances. Nevertheless, you should keep the following in mind and never let some scam creditor take advantage of your situation: •Until you are sure you are liable for the repayment of the debt, do not send any money to a creditor. •To have a clear idea about your obligations, ask your creditor to forward you the written documents that state the original purpose of the debt, your responsibility towards the debt and the exact current amount of the debts. •Consult an attorney to work an easy way out of the complexities entailed by the obligation. Death of a dear one is an irreparable loss; that goes without saying. But a massive financial loss due to the fraudulence of creditors can be a great blow for you. So, do not let your logic depart even at toughest of times and you can protect yourself against the deceit of unscrupulous creditors.

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