What happens to my student loans when I die?
It is a general consensus that when you die your death is automatically forgiven. After all, you died; you no longer owe anyone, right? Wrong! Your death is not forgiven when you die; in fact it is now the new responsibility of your loved ones who now secretly hate you for dying. That’s the cold reality. Your loved ones are held liable for your arrears.
You may be wondering from the great beyond that your family has expenses of their own, how can they possibly manage to pay off this huge debt and probably they might have to take the money from out of their own pockets. Usually that is not the case; creditors normally go after family assets such as estates and properties so they can retrieve the money owed to them legally. Basically they take away your family’s inheritance, so now they probably hate you more having nothing to inherit. However if there is no assets the family will not inherit the debts, but it will cancel out. The deceased must now have no money in a bank account, stocks, bonds or CDs. He must not have any large items in his possession such as a car or it will be sold to pay for the debt.
Spouses however are made liable in some cases to pay for their spouses debts. This occurs in community property states. Some community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. Only debts occur during the marriage are held against the spouse. In that case, if you are living in community property state I think its best you move.
Joint accounts or joint debts will also fall on the spouse or another family member that is alive. Because of the legal ties the debt may have to be paid off in full even if the debt was caused by the deceased. This may especially tedious for loved ones who have to manage current expenses and now this debt .
You must be wondering is there anything that can be done and if so why hasn’t this writer tell me already. Like all good writers do, you usually save the best for last. It is impossible to prepare for an unexpected debt but they are a number of things a family can take into consideration. The debtor needs to bring his debt to his family’s attention. He needs to notify them of how much he’s accrued over the period in question and who is the creditor. With this information the family can now strategically plan their future goals around your debt so in case you take the long sleep they will be financially secured.