Do you ever wonder what happens to your debt when you pass on? While debt collectors can certainly try and collect what is owed to them when you are alive, what do they do when you are no longer here? Will the debt get wiped away and your name cleared from owing anything?
When a person passes away with debt, that doesn’t mean debt collectors are going to cease all attempts to collect what is rightfully owed to them. While they may no longer be able to get it from you, there are other steps they can take to obtain the money you owe them. One of the more common ways debt collectors recover the money a person owes them after they have passed away is by getting it from their estate.
When a person dies, any debt they have accrued over the course of their lifetime will usually be settled from their estate. Essentially, what this means is that if you owe a debt collector $10,000, your estate will pay that given the money is available to satisfy these debts. After all debts are paid, any amount left over will then be passed down to heirs or according to the instructions outlined in your will.
Creating an Estate Plan that Establishes How Debts are Paid When You Pass On
While most people would prefer not to have their estate settle any unpaid debts and instead, have the money go to a spouse, child, or sibling, these are financial obligations that must be met. However, while you may still be on the hook for the unpaid debt even after you die, you can decide what assets shall be used to cover these unpaid debts—but you are going to need an estate plan that establishes this.
In your estate plan, not only can you decide who will receive certain property and what will happen to the contents left in your bank account, but you can also decide what money/assets will be used to satisfy an unpaid debt. It is extremely important that you sit down with a Coral Springs, FL estate planning attorney to decide this to prevent from having certain assets you wish to pass down be liquidated and instead, used to cover your debt.
Connect with a Coral Springs, FL Estate Planning Lawyer to Get Started on Your Estate Plan
While debt collectors are prohibited from using “abusive, unfair, or deceptive practices to try and collect a debt,” that doesn’t mean they won’t try and contact family members or even your spouse to try and recover the money that is owed to them [Source: Federal Trade Commission (FTC)]. To prevent this from happening, it is recommended that you contact Express Law so that you can sit down with a qualified estate planning attorney in Coral Springs, FL who can help you write up an estate plan that addresses this and much more.
Express Law can be reached at:
2900 West Sample Road
Pompano Beach, FL 33073