NDSU Extension Service - Ramsey County


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Debt When You are Gone

Debt When You are Gone


            We know the “it” in “you can’t take it with you” refers to money, but what about debt?  Does that remain behind also for your survivors to deal with it?

            Americans currently have less credit card debt per person than in previous years but credit card debt is still a burden to many.  According to a new survey of 1,004 U.S. adults from CreditCards.com, 1 in 5 Americans believe his or her debt will never be paid off.  

Add to that worry the fact that your debt could cause headaches for your descendants, depending how you handle things – and how they handle everything.

            If a loved one leaves behind thousands of dollars in debt on credit cards, you probably have nothing to worry about unless you are a co-signer on that card, in which case you have a financial loss on top of an emotional one.  If you are an authorized user but not a co-signer, you are not responsible. If a spouse dies, and your name is associated with some of the debt, you can expect the creditor to insist that you pay up.

            In the case of mortgage debt, if you live in the house as a co-owner, or if you inherited the house, as long as you take over the payments, you should have nothing to worry about. Federal law prohibits your home mortgage lender from calling due the complete mortgage after one spouse has died. If the title of your home is held jointly with rights of survivorship, the half of the home that your deceased spouse owned will automatically transfer to you at his or her death. Even though you are now responsible for the entire mortgage, the home will now be entirely yours.

            If your parent, child or spouse passed away, and he or she was still making car payments, the vehicle can be repossessed by the lending organization – bank, credit union, car dealership, etc., but not if you're willing to take over the payments,

            There are a few things that you can do to make life easier for your family, friends, and estate executor before you die.

  • You should make a list of all your accounts, assets, and debts. It will pay dividends to have all that information ready for your executor and save time and energy after you’re gone.
  • It is also important to update the beneficiaries to all of your accounts, retirement accounts, and insurance policies.
  • In order to avoid probate court, you may want to consider making more of your assets joint with rights to survivorship so they pass right to your spouse or heirs without probate.
  • Now more than ever before, it is important to have a listing of your online accounts, username, and passwords where your executor can easily find and then deactivate accounts and collect final payments, if applicable, from websites like Facebook, Twitter, PayPal, eBay, and the many others that you may have a membership.
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