What happens to debt if you die?
What happens if someone is independent, has no wife or kids, but has several thousands of dollars in credit card/student loan debt. Because he was young he had no will, he committed suicide. I’m not sure if his parents co-signed his loan for school. If they did do they have to pay considering he never finished school (payments are deferred until after graduation) and if they didn’t does the lender lose the money?
Also not sure if he declared himself independent or if his parents claimed him as a dependent because they were helping pay for college.
If his parents claimed him, and he declared himself independent, then who’s fault is that?
Everyone blames me for his death, although i disagree, I do feel guilty. Im trying to figure out whether or not his parents assumed his debt, because if they did, i’d like to help them out with it They are really nice people, and are both retired. It was bad enough that the lost nearly ALL of their retirement in the recession, they defaulted on their mortgage (which was their 2nd mortgage to help pay for his undergraduate degree), and his dad is too old to go back to work (commercial pilot). It’s bad enough they just lost their only child, and are in severe financial trouble themselves, they don’t need the extra debt.
Can any lawyers out there give me a legal summary and can any other person (you know…with a soul (sorry lawyers)) give any advice on the moral side of things? Thanks!
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5 comments
rpg on October 21, 2009 at 2:14 pm
On the student loans: It depends whether they were Federally backed student loans or private student loans. Federally backed student loans die with the debtor. Actually, the Federal government is the guarantor of Federally guaranteed student loans, so on the death of the borrower, the Federal government pays off the remaining balance.
Private student loans are completely different. Many private student loans do NOT die with the borrower and the co-signer IS liable for paying it off. There are (true) horror stories about students who died with high private student loan debt leaving the families to deal with not only the death of their loved one, but also very high loan balances and draconian bill collectors who harrass them for payments before the funeral has even taken place.
Lynn on October 21, 2009 at 2:14 pm
Well, it stays there but you don’t have to put up with the stress of the debt.
sgooey on October 21, 2009 at 2:14 pm
"…can any other person (you know…with a soul (sorry lawyers))…"
Epic note.
Michael T on October 21, 2009 at 2:14 pm
Normally a debt dies or is paid out of his estate if assets are available when a person dies but if someone cosigns, they will be responsible for the debt.
It doesn’t matter if he declared himself independent or not. The only thing that is important is whether someone cosigned or is a co-owner.
Read the following under "Define Liability".
http://www.ehow.com/way_5194874_happens-debt-someone-dies.html
SGElite on October 21, 2009 at 2:14 pm
All debts will be written-off!