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Who is responsible for debts remaining after a death?

After a close family member has passed away, the last thing you want to worry about is debt that was left behind. A decedent's debts usually disappear upon death. Unfortunately, this is not always the case, leaving mourning family members with big bills to pay.

The average American dies with more than $60,000 in unpaid debt according to a study by Credit.com. The primary sources of the debt include:

  • Credit cards
  • Mortgages
  • Car loans
  • Personal and student loans

While debts are frequently discharged at death, creditors will try to go after the deceased person's estate for payment. Not only may this deplete the money or assets the person left behind, beneficiaries may find themselves in difficult situations. For example:

  • Joint credit cards: If you and the deceased have a jointly-owned credit card, you will be responsible for paying the outstanding balance, no matter who used it to buy items.
  • Home mortgages: If you live in a house owned solely by the deceased, the lender can sell the property in order to pay off the mortgage, leaving you without a home.
  • Cars used by others: If the deceased owned and was still making payments on the car you drive, that vehicle will be used to satisfy the auto loan. The same may apply to other assets that were purchased on credit, such as furniture or appliances.
  • Co-signers: If you co-signed or guaranteed a loan for a friend or family member, you are responsible if there is an outstanding balance at that person's death.

If you are dealing with the aftermath of a loved one's death and unpaid debts are involved, seek counsel from an experienced estate planning attorney.

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