Many avoid thinking about what happens to their debt after they die. Understanding what type of debt you have is important because your debts may or may not pass on to other people after you die.
Talking to a lawyer about your debt may help you prepare and avoid problems for what may happen to your debts after your death. Check out this visual guide of What Happens to Your Debt After You Die.
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Do you have any kind of debt? If so, you may want to consider what will happen to that debt if you die before paying it off. Many people avoid this topic, but it’s important to understand just what can happen to those bills when you’re gone.
When you die, your debts may or may not pass on to other people, depending on the type of debt you held.
Just because you are gone and no one else is responsible for your debts doesn’t mean the banks and credit card companies will go unpaid. Here’s what happens:
What about property and items left to your family and friends? What will happen to these when you die?
Some states have "community property" laws, which change the game.
Preparation can be key to avoiding problems after your death. You can structure and separate accounts to avoid leaving family or friends with your debts and make sure to stay on top of things when possible. Many sources recommend using a lawyer when doing your estate planning to make sure you haven’t left any loose ends.
The question of what happens to debts after death can cause a lot of confusion. Total Bankruptcy is here to help set the record straight. See our posts on Debt After Death and Fair Debt Collection Practices Act.
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