VanAntwerp Attorneys, LLP
Phone: 606-618-0698

Debt after death

Estate planning should provide you and your loved ones with peace of mind. Taking the proper legal teams can provide your family with money and assets to help secure their futures.

However, more people are leaving behind financial obligations. According to a December 2016 report by, 73% of consumers had outstanding debts when they were reported as dead. The average in total balances was $12,875. Mortgages increased that number to $61,554.

Specific data includes:

  • Student loans – six percent with an average of $25,391
  • Auto loans – 25 percent with an average of $17,111
  • Personal loans – 12 percent with an average of $14,793
  • Credit card balances – 68 percent with an average of $4,531

Life ends, but debts will not disappear and could affect those you leave behind. Financial obligations transfer from an individual’s ownership to the estate’s responsibility. Loved ones will receive what is left over if sufficient assets allow creditors to be paid.

In most cases, they are not responsible for the remaining balances. However, complexities exist depending on the value of the estate, where you reside and the type of debt you have. Federal student loan debt is eligible for cancellation. However, private student loan companies are not quick to forgive and can pursue the estate for payment.

A home that family members continue to reside in may require someone to take over the mortgage or possibly sell the home to pay creditors. Co-signers and co-applicants of loans can find themselves accountable for paying off remaining balances.

Many surviving spouses, minor children and other dependants may not need the money. For those who do, proactive steps along with wills and trusts can ease the financial burden. While life insurance can cover remaining debts, completely staying out of debt is the most obvious solution. However, for a majority of consumers, that is clearly easier said than done.

Debt may be a part of your life, but it does not have to be a part of your death.

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