The quick answer is no, your family will not be responsible for paying your debt after you die. However, if you own assets that might be inherited to your family and loved ones, your debt just does not disappear. An estate would have to be set up in order to process your assets in order to pass them down to your family. Before this can happen, your debts will have to be dealt with in some way. At least a portion of your assets will need to pay for a portion of the debts. In many instances, though, an attorney can negotiate unsecured debt down. Once all the assets are sold and the debts are dealt with, the remaining money is then dispersed to your family and loved ones as per your will or, if you did not have a will, what the state law requires. Proceeds from life insurance policies do not become part of the estate; thus the creditors do not have access to those funds.

One issue that arises often when someone dies is the co-debt that might exist with someone who is alive. For example, a husband and wife both signing mortgage documents or a home equity loan. If one of those spouses dies, then the other person is still responsible for the entire debt. If you have signed on loan documents saying that you will be responsible for the debt no matter what, then the money lenders will hold you to that promise.

Commonly debt collectors will tell people that they are responsible for their deceased loved one’s debt. This is not true. Someone can only be responsible for someone else’s debt if they co-signed that debt. Any creditors telling you that you have to pay someone’s debt have no way to make you pay for it. They cannot sue you, put a judgment on your property or put negative marks on your credit reports.

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