If you are in debt, it may seem like the weight of it is following you around wherever you go. Does this ring true when you pass away? You may be wondering, “what happens to my debt when I die?”
If you think you may be in debt when you pass, you are not the only one. Reports show that over 70 percent of Americans are in debt when they die. Many individuals had debt of student loans, car loans and credit card debt remaining.
Where does your debt go?
Many people choose to leave an estate for remaining family members to receive. If you are in debt when you die, an executor will pay off the balance owed using your assets before distributing them to your family. This means that your beneficiaries could receive less if you are in debt. Debt that an executor will pay off using your estate may include:
- Credit card debt
- Mortgage debt, if you did not create a joint account
- Medical debt
- Car loan debt
Will your family be responsible for your debt?
If you have a lot of debt, you may be worried that your family will be responsible for paying it off with their own money after you are gone. However, that is not typically the case. However, if a child or spouse co-signed a loan, the most common example being a mortgage, the debt would pass on to that co-signing individual.
Dealing with debt can be stressful and confusing, but knowing what happens to it when you die may help you put your affairs in order.