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What Happens to Your Loans Debt If You Die

by Jim ONeil on June 1, 2011

in Personal Finance Tips

This is a question that concerns many family members when someone passes and they realize the deceased was floating in a sea of debt. In most cases, this will not affect anyone else involved, but there are some exceptions.

Any debt that is incurred solely by the individual will be dismissed with a person’s death. Surviving family members are in no way responsible for their debt. However, if there is an estate, the lenders can file a petition to have the estate settle any remaining debt.

In many cases, they will have to settle for pennies on the dollar if there is not enough in the estate to cover the entire debt.

Any joint accounts may end up falling to the remaining survivor. Some companies offer insurance against this very scenario, so it is best to investigate with each company or bank where joint accounts are held.

This can be a very touchy subject and different countries, counties, states, etc… may all have their own laws regarding this situation. The best advice that we can give to ensure that you are clear on all laws is to consult a financial advisor in your area that is familiar with local laws.

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