What happens to debt when you die?

[4600]

What happens you a person's debt when they die? For example, if I had $25,000 in credit card debt when I died, would anyone be responsible for paying that off or does the credit card company just lose it?

[Bob B.]

I don't know how it works entirely, but creditors are entitled to repayment of debt.

Estates run through the probate process after death.

As I understand it, creditors must be notified of the death, and are given a period of time (3-6 months?) to make claims against the estate.

Before property can be transferred to heirs, the creditors claims must be satisfied.

If debts exceed assets, the executor of the estate sells the deceased's property to satisfy as much of the debt as possible.

But, I would imagine that if the deceased is young, and has $25,000 in credit card debt, and next to no assets, that debt would go unpaid.

[Thrif-t]

If there isn't enough money in the estate to cover the debt it is written off.

If there is money, then the creditors are to be paid first before anyone inherits the money.

[daledegagne]

If there isn't enough money in the estate to cover the debt it is written off.

If there is money, then the creditors are to be paid first before anyone inherits the money.

This.

Your estate has a priority list of obligations. First taxes, then debts, then money to your beneficiaries. If your estate is insolvent (can't meet it's obligations) then the books are closed on it.

That said...if you're thinking of committing suicide I revert my previous answer and your wife/kids/mother/brother will all be held liable for the debt so don't do it. Seriously...get help.

[Weird Tolkienish Figure]

Yeah is this a cry for help?

I understand money problem are scary but honestly, money is just something to make the world go round.

We go to work, we get little pieces of paper for said work, we trade in those pieces of paper for stuff we need or want to buy.

That's all money is. On the other hand, death is pretty final, and we all only get one shot. There's are people in this world who wish they were you, you may not realize it but it's true.

Dollars are made and lost every day, but all people in the world are born, live and die. No negotiations there, at least not yet.

That's one problem I have with the "frugality" movement, they act like acquiring wealth is the end unto itself. I know not all do but I see this time and time again. Live like a pauper, skip the Starbucks, and retire early! Yayyyy...

Well to me you're only young once and not everyone makes it to retirement. A large number of people die 6 months after retirement.

I'm not saying don't save of course, DO SAVE, but I think some perspective is needed.

Just my $.02.

[daledegagne]

That's one problem I have with the "frugality" movement, they act like acquiring wealth is the end unto itself. I know not all do but I see this time and time again. Live like a pauper, skip the Starbucks, and retire early! Yayyyy...I'm not saying don't save of course, DO SAVE, but I think some perspective is needed.

Well said.

I think the frugality movement has one thing right - It's that we should establish a baseline of what we really need or want in life. It doesn't have to be a pittance but it needs to be established. If you don't establish that baseline requirement of consumption for contentment, then no amount of consumption or wealth growth will ever satisfy you.