Login To Your Account

1-800-982-8445

Financial Freedom Community

This site is a resource for Financial Education, Debt Solutions and Tools to assist with Credit Management. All the resources on this site are free of charge. We encourage visitor feedback, Tell us what you want to see more of! Sign up for news & updates and we'll keep you posted on the latest!


Navigation

Home
Bankruptcy
Community Resources
Consumer Protection
Employment Resources
Financial Assistance
Health and Human Services
National Resources
Seniors Resource Center
Tax Resources
Getting Ready to FIle Your Federal Tax Return
Transcript - Getting Ready to FIle Your Federal Tax Return
Info Graphic - Getting Ready to FIle Your Federal Tax Return
The Importance of filing your Tax Return or Tax Extension on Time
Transcript - The Importance of filing your Tax Return or Tax Extension on Time
Info Graph - The Importance of filing your Tax Return or Tax Extension on Time
Most Common Tax Filing Errors
Transcript - Most Common Tax Filing Errors
Info Graphic - Most Common Tax Filing Errors
Owing Money To The IRS
Transcript - Owing Money To The IRS
Info Graphic - Owing Money To The IRS
What to do with your tax refund
Transcript - What to do with your tax refund
Info Graphic - What to do with your tax refund
Consumer Personal Loans
Credit Card Debt
Advantages of Making Credit Card Debt Payments on Time and Other Tips
Avoiding Credit Card Traps
Credit Card Counseling - Learn Credit Management Tips
Credit Card Debt and Simple Ways to Consolidate Them
Credit Card Debt Consolidation Nationwide Epidemic
Credit Card Debt Consolidation Solutions
Credit Card Debt Help for Senior Citizens
Credit Card Debt Reduction
Credit Card Debt Solutions That Can Help
How to Pay Your Way Out of Credit Card Debt
Paying Off Your Holiday Credit Card Debt
Prevent Identity Theft With a Credit Freeze
Saving Money on Your Credit Card Bills
Terminate Credit Card Debt Without Consolidation
Tips on Credit Cards, Part 1
Credit Collection Laws
Credit Repair Organizations Act
Fair And Accurate Credit Transaction Act
Fair Credit Billing
Fair Debt Collection Practices – Know Your Law
Statute of Limitations
The Fair Credit Reporting Act
The Fair Debt Collections Practices Act
The Truth In Lending Act
Credit Counseling
Can Consumer Credit Counseling Help Avoid Foreclosure
Credit Card Counseling
Credit Counseling a Must for Bankruptcy
Credit Counseling Benefits
Credit Counseling Can Reduce Your Debt
Difference Between Credit Counseling and Debt Settlement
Free Credit Counseling to Help Manage Your Debt
Using Credit and Debt Counseling to Manage Your Finances
What Can Credit Counseling Offer You?
What is Credit Counseling
What to Ask a Credit Counselor?
Credit Education
Balance Transfers -- Are they really free?
Transcript - Balance Transfers – Are they really free?
Info Graphic - Balance Transfers -- Are they really free?
Consumer's Rights
Establishing New Credit
Finance Charges
What Are Secured Credit Cards
Transcript - What Are Secured Credit Cards
Info Graphic - What Are Secured Credit Cards
Credit Reports and Scores
Credit Repair After Bankruptcy
Do you Know the Benefits of Checking your Credit Report?
2016 Understanding Consumer Credit Guide
DCC Educational PDFs
Debt Consolidation
4 Valuable Tips on Debt Consolidation
Become Debt Free With Financial Advice
Benefits of Debt Consolidation
Bill Consolidation Loans
Bill Consolidation Advice to Help With Debt
Credit Consolidation: Is It Worth Taking?
Debt consolidation and Ways to Avoid Scams
Debt Consolidation Explained - What Happens if You Don't Pay?
Debt Consolidation Loans
Debt Consolidation Loans for Payday Loan Debt
Debt Consolidation Non-Profit
Debt Consolidation Now Will Improve Your Credit Score Later
Debt Consolidation Provides Relief from Financial Stress
Debt Consolidation Services Helps to Clear Debts
Debt Consolidation – Find Relief To Your Financial Stress
Debt Management Program
Debt Management Program Will Ease Debt Burden
Do You Need Debt Consolidation?
Get a Debt Consolidation Loan to Manage Bad Debts
Government Debt Consolidation Loans
Government Debt Consolidation Loans for Student Loans
How to Consolidate - Debt Help - Consolidate Your Debt Payments
How to Consolidate Bills Effectively When Left in Debt
How to Consolidate Debt
Let the government help you consolidate your debts
The Advantages of Credit Consolidation
Understanding Debt Consolidation Loans
Debt Girls
About The Girls
Debt Settlement
Debt Settlement Scams
Info Graphic - Debt Settlment Scams
Transcript - Debt Settlement Scams
Elderly Can Benefit from Debt Settlement
Financial Tools & Calculators
Bill Reminder Tool
Bill Reminder User Guide
Calculators
Car Loan Calculator
College Savings Calculator
Credit Card Payoff Calculator
Mortgage Loan Payment Calculator
Retirement Calculator
Savings Calculator
Loan Modification Guide - Do It Yourself
Frequently Asked Questions
Step 1: Prepare yourself
Step 2 Gather the necessary documents
Step 3 Know what to expect
Step 4 Contact your lender
Step 5 Review your loan-modification plan
Step 6 Finalize the approval and begin making payments
Phone Apps
Home Buying
Build or Buy a Home
Choosing a Real Estate Agent
Home Equity Interest Rate Charges
Home Equity Line of Credit
Home Equity Loan Fees
Lease Buy Backs
Transcripts - Lease Buy Backs
Info Graphic - Lease Buy Backs
Managing Your Mortgage
Mortgage Basics
Mortgage Debt Elimination, 3 Things You Must Know
Quick Guide to Loan Modification
Transcript - Quick Guide to Loan Modification
Info Graphic - Quick Guide to Loan Modification
Real Estate Laws
Refinancing
Renting vs Owning
Interesting Money Articles
12 Amazing Facts about Credit Card Debt
12 More Interesting Facts About Money – Part 2
24 Amazing Pictures of Money
Introduction To Budgeting
7 Steps to Successful Budgeting
All You Need to Know About Budget Basics
Basics of Personal Budgeting
Budgeting - How Much?
Debt Management and Prevention Using a Budget
How to Pay Off Debt – Start Budgeting
Maintaining and Budget Planning
Manage Your Debt by Learning How to Budget
The Basics of Budgeting
Transcript - The Basics Of Budgeting
Info Graphic - The Basics of Budgeting
The Importance of a Household Budget
Managing Debt
1 in 10 Having Wages Garnished
Advanced Fees For Unsecured Loans
Info Graphic - Advanced Fees For Unsecured Loans
Transcript - Advanced Fees For Unsecured Loans
Debt Relief The Issue of Forgiveness
Get Out of Debt by Changing Your Financial Habits
Personal Finance Management to Reduce Debt
Start Early Teaching Kids Money Management and Savings
Saving Money
Banking & Credit
Energy Saving Tips
Info Graphic - Energy Saving Tips
Transcripts - Energy Saving Tips
Enjoy the Holidays Without Breaking the Bank
Info Graphic - Enjoy the Holidays Without Breaking the Bank
Transcript - Enjoy the Holidays Without Breaking the Bank
How 'Charge Offs' Effect You
Insurance & Housing
Money Management Means Setting Goals
PREPARING YOUR BUDGET FOR A WORSE CASE SCENARIO
Save Money When going to work
Spendaholic
Transportation Savings
Utilities and Savings
What Debt Should You Pay First?
Young Couple Finances
Student Loan Debt
Student Loan Default Penalties
Consolidate Student Loans
Student Aid
Student Loan Tips for Recent Graduates
Student Loans and the Credit Squeeze
Types Of Debts
Auto Loan Prepayment Penalties
Balance Transfers
Credit Card Minimum Payments
Gambling Debt Problem Gambling and Bankruptcy Connection
Holiday Credit Card Debt
Ideas To Save
Inherited Debts?
Six Easily Avoidable Causes of Debt
Ways to Pay Off Holiday Debts
Video Library
Personal Finance Video library
Tax Tips Video library

Free Consultation




McAfee SECURE sites help keep you safe from identity theft, credit card fraud, spyware, spam, viruses and online scams

Latest Headlines

Latest Infographics

Most Popular Articles

Inherited Debts?

by Gary Foreman

I’ve heard that when parents are in debt and they die the debts are left to the children to pay off. Is this true? My parents had gotten a divorce a few years ago. My mom is doing well because she is a saving queen. My dad had remarried two years ago. His wife does not work but loves to spend money. So now they have a $20,000 debt. If my father dies, his wife is responsible for the debt, right? What happens after she dies and there is still that debt? Also, what happens if she dies first, and then my father–who gets the debt? Judy

Judy asks a question that comes up often. Can someone die and ‘leave’ their debts to you? The answer is no. Parents can’t leave their debts to you. In fact, they can’t even leave their debts to their spouse.

Typically a will controls financial affairs after a person’s death. A will distributes assets, not debts. But, before any money can be distributed to heirs, all the debts must be paid. So enough assets are sold to pay for any debts that remain. Only after the debts are paid will the remaining assets be distributed among the beneficiaries of the will.

The key point to remember is that you are only responsible for debts that you contractually created. There are certain circumstances that would put Judy at risk for her dad’s debt. But she would have had to do something to cause that responsibility.

Suppose that Judy’s dad asked her to co-sign a loan. Signing would make her responsible for the debt. Not only if her Dad died, but also if he failed to make a payment. But she shouldn’t be surprised. When you ‘co-sign’ a loan, you do just that. You put your signature on the loan application.

A similar situation occurs with a joint credit card. A joint account allows anyone named on the account to use it to create a debt. But it also means that everyone listed on the account is responsible for the entire debt that’s created.

Suppose Judy had a joint card with her dad. And he was the only one using the card. Any debts he left at death would be Judy’s. But once again, it should be no surprise to Judy. She signed the joint application for the account. And it’s her responsibility to be aware of whether it’s being paid off or not.

It wouldn’t be unusual for Judy’s dad and step-mother to have a joint account. In that case the survivor would be responsible for any balances on the account.

Joint credit card accounts often create problems in a divorce. Often a couple has a joint account before the divorce. The credit card company isn’t going to split the bill just because a couple throws in the towel. As far as they’re concerned, both the ex-husband and wife are responsible for the entire amount of the bill until it’s paid. And while a court can instruct one party to pay, sometimes it still doesn’t happen.

Another way that people end up paying someone else’s debt is when you let someone use your credit card. Again, it should be no surprise when the bill comes in. You may end up consolidating debt for someone else and doing them a favor by accident.

So what happens to the debts of someone who dies? The credit card company will first try to collect from the estate. As mentioned earlier, assets will be sold to pay the bills. Then, if the account was a joint account, any survivors will be left holding the bag. If the debt belonged solely to the deceased, then the credit card company will end up eating the debt if there aren’t enough assets to cover it.

But Judy isn’t completely off the hook. She might still want to advise her dad to control his spending. As her father and step-mother get older they could have trouble keeping up with the minimum payments. And, once they fall behind things will get tough. Credit card companies are quick to bump up interest rates when you miss a payment.

And that would be trouble. Judy’s father will probably be living on a fixed income during retirement. So the payment that was a struggle at 12% interest becomes impossible when the interest rate goes to 20%. And unless they have some assets that can be sold to reduce the debt, the minimum payments will dominate their finances.

And that’s where Judy comes in. I don’t know her relationship to her father, but it would be awfully hard to watch a parent struggle to put food on the table. Even if they caused the problem by foolish past spending.

It actually would be interesting if parents could ‘leave’ their debts to someone after they die. I suspect that many children would treat their parents much better if that were the case. Instead of parents threatening to cut a child out of their will, parents could run up large debts and threaten to put a child into their will! Never mind! It’s a good thing that the law doesn’t read that way. Somehow I don’t think that it would be good for family relations.

Gary Foreman is a former Certified Financial Planner.

McAfee SECURE sites help keep you safe from identity theft, credit card fraud, spyware, spam, viruses and online scams