Who Will Aquire a Parents Debt After They Die?
Author: karenb
Posted: Thu Mar 03, 2005 7:58 am
Post subject: Who Will Aquire a Parents Debt After They Die?
My in-laws have a lifetime of poor financial decisions. They are now in their mid and upper 60's and in poor health. They have no retirement income other than social security (and they are both presently working part-time). My father has a small life insurance policy (which he's borrowed against) and I doubt there's even enough there to bury him properly.
At this time, their debt includes:
1) Credit cards (I'm guessing somewhere between $5000 - $10,000
2) Home mortgage (they just bought a new house with low down payment, so hardly any equity is paid off)
3) Car payments (for another 3 years)
4) Appliance store payments (for refridgerator)
5) Furniture store payments (of course, furniture for new house)
Of course, if one of them dies, the other is going to be in huge financial difficulty, I would presume. Also, to pay off all this debt, they both need to continue working part-time. We keep urging them to rein in their spending and get things under control, but to no avail.
My question is, if they both die, what debt are we, the children, responsible for? (presumably the court would appoint my husband to handle the estate as there is no other family) Do debts automatically get cancelled when one dies? (They live in Florida by the way). I found one website that said that credit card debts get cancelled, but another one said that a living spouse would be responsible. So what about the kids in the event of the death of both parents?
We are engaged in humanitarian work overseas, and although we're completely debt free, our small salary would certainly not enable us to take care of their debt.
Author: NightStar
Posted: Thu Mar 03, 2005 10:18 am
Post subject: Responsibility of debt
incurred prior to the death of a parent
Right now, if any creditors went after them, they could garnish non-social security funds individually.
Now if any of the accounts are joint, they could go after the funds of the other spouse. But it had to be entered into together, joint responsibility.
If neither of them were working, then all income would be exempt, they would be safe from paying, but their credit would be harmed by the derogitory reporting.
Upon their death, the estate would be responsible for the debt, any assets might be taken to cover the debt. Who ever is the power of attorney would be responsible for over seeing this, but not personally responsible.
What it may come down to is that there are no assets, to cover the debt, the creditors may have to just write off the debt take a profit loss.
Only thing I can see wrong is that there would be no inheritance for the children from the estate, it would first be garnished for debts owed.
_________________
Best Regards,
Pammila Phillis
Board Monitor
http://www.cardratings.com
501-663-0314 PH
Author: Karenb
Posted: Thu Mar 03, 2005 7:22 pm
Post subject: Debt Incurred Upon the Death of a Parent
Right now, they're managing to pay (at least the interest amounts) on their accumulated debt. (And all this debt has been accrued in just the past 8 years -- they declared bankruptcy back then, and have just started over with all their bad habits).
My first concern is what happens if one of them dies and the other isn't able to handle all the payments. Or if one or both of them gets to the point where they can't continue to work.
My second concern is whether we'd be responsible for paying these debts if both of them die, but it appears that we won't be. An inheritence isn't really important to us. The last thing we need is more "things" and we have enough money to live comfortably in our present third world location.
Author: NightStar
Posted: Thu Mar 03, 2005 10:27 pm
Post subject: Responsibility of debt
incurred prior to the death of a parent
If one of your parents becomes ill, disabled (unable to work), or passes away, then your other parent would only be responsible for the debt that was joint amoung them. And then they can only go after the money earned from employment, they could not take the SSI income it is exempt.
Worse case they are going to repo the car, and foreclose on the house, the single parent, or both if just ill - would have to make other living arrangements and secure another car.
If that happened, and the debt was too much to deal with, I would suggest that the one or both of your parents, either discontinue working and live only off of SSI or file bankruptcy to discharge the debt.
After 10 years chapter 7 can be filed again if needed.. and after 6 years chapter 13 can be filed.
After so many years, the statute of limitations on collecting a debt expires, and if a creditor tries to sue after that point, then your surviving parent, or both of them would need to appear in court to inform the judge that the debt is time barred and it would be thrown out.
If they are sued before the expiration of the statute of limitations, then nothing they can do about it, a new statute of limitations would be set by the judgment, if they are working at that time only a percentage could be garnished, still the SSI is exempt.
They have a safty net with the SSI, they can fall back on, just that they might not like the stress of the situation, creditors trying to pressure them into covering outstanding debt.
_________________
Best Regards,
Pammila Phillis
Board Monitor
http://www.cardratings.com
501-663-0314 PH
Posted: Thu Mar 03, 2005 7:58 am
Post subject: Who Will Aquire a Parents Debt After They Die?
My in-laws have a lifetime of poor financial decisions. They are now in their mid and upper 60's and in poor health. They have no retirement income other than social security (and they are both presently working part-time). My father has a small life insurance policy (which he's borrowed against) and I doubt there's even enough there to bury him properly.
At this time, their debt includes:
1) Credit cards (I'm guessing somewhere between $5000 - $10,000
2) Home mortgage (they just bought a new house with low down payment, so hardly any equity is paid off)
3) Car payments (for another 3 years)
4) Appliance store payments (for refridgerator)
5) Furniture store payments (of course, furniture for new house)
Of course, if one of them dies, the other is going to be in huge financial difficulty, I would presume. Also, to pay off all this debt, they both need to continue working part-time. We keep urging them to rein in their spending and get things under control, but to no avail.
My question is, if they both die, what debt are we, the children, responsible for? (presumably the court would appoint my husband to handle the estate as there is no other family) Do debts automatically get cancelled when one dies? (They live in Florida by the way). I found one website that said that credit card debts get cancelled, but another one said that a living spouse would be responsible. So what about the kids in the event of the death of both parents?
We are engaged in humanitarian work overseas, and although we're completely debt free, our small salary would certainly not enable us to take care of their debt.
Author: NightStar
Posted: Thu Mar 03, 2005 10:18 am
Post subject: Responsibility of debt
incurred prior to the death of a parent
Right now, if any creditors went after them, they could garnish non-social security funds individually.
Now if any of the accounts are joint, they could go after the funds of the other spouse. But it had to be entered into together, joint responsibility.
If neither of them were working, then all income would be exempt, they would be safe from paying, but their credit would be harmed by the derogitory reporting.
Upon their death, the estate would be responsible for the debt, any assets might be taken to cover the debt. Who ever is the power of attorney would be responsible for over seeing this, but not personally responsible.
What it may come down to is that there are no assets, to cover the debt, the creditors may have to just write off the debt take a profit loss.
Only thing I can see wrong is that there would be no inheritance for the children from the estate, it would first be garnished for debts owed.
_________________
Best Regards,
Pammila Phillis
Board Monitor
http://www.cardratings.com
501-663-0314 PH
Author: Karenb
Posted: Thu Mar 03, 2005 7:22 pm
Post subject: Debt Incurred Upon the Death of a Parent
Right now, they're managing to pay (at least the interest amounts) on their accumulated debt. (And all this debt has been accrued in just the past 8 years -- they declared bankruptcy back then, and have just started over with all their bad habits).
My first concern is what happens if one of them dies and the other isn't able to handle all the payments. Or if one or both of them gets to the point where they can't continue to work.
My second concern is whether we'd be responsible for paying these debts if both of them die, but it appears that we won't be. An inheritence isn't really important to us. The last thing we need is more "things" and we have enough money to live comfortably in our present third world location.
Author: NightStar
Posted: Thu Mar 03, 2005 10:27 pm
Post subject: Responsibility of debt
incurred prior to the death of a parent
If one of your parents becomes ill, disabled (unable to work), or passes away, then your other parent would only be responsible for the debt that was joint amoung them. And then they can only go after the money earned from employment, they could not take the SSI income it is exempt.
Worse case they are going to repo the car, and foreclose on the house, the single parent, or both if just ill - would have to make other living arrangements and secure another car.
If that happened, and the debt was too much to deal with, I would suggest that the one or both of your parents, either discontinue working and live only off of SSI or file bankruptcy to discharge the debt.
After 10 years chapter 7 can be filed again if needed.. and after 6 years chapter 13 can be filed.
After so many years, the statute of limitations on collecting a debt expires, and if a creditor tries to sue after that point, then your surviving parent, or both of them would need to appear in court to inform the judge that the debt is time barred and it would be thrown out.
If they are sued before the expiration of the statute of limitations, then nothing they can do about it, a new statute of limitations would be set by the judgment, if they are working at that time only a percentage could be garnished, still the SSI is exempt.
They have a safty net with the SSI, they can fall back on, just that they might not like the stress of the situation, creditors trying to pressure them into covering outstanding debt.
_________________
Best Regards,
Pammila Phillis
Board Monitor
http://www.cardratings.com
501-663-0314 PH
posted by CardRatings.com at 11:39 AM
0 Comments:
Post a Comment
<< Home