Tag Archives: responsible
An Inheritance of Debt
“He left me nothing but bills. Do I have to pay them?”
Unfortunately, many folks who have lost a loved one quickly find that the deceased had accrued substantial debt. Survivors are often then left with the challenges of managing this debt both ethically and legally. While the moral issue is something that should be understood, the legal obligation is what concerns most people. The usual question asked is “Do I owe the debt of a deceased family member?” The answer may shock you.
If a deceased person originated a debt that he/she alone accrued, then he/she was responsible, and you are not. In this case you should rest easy because you would have no legal obligation to pay the debt. However the debt of a dead relative may affect you due to possible responsibility of their estate to make right those obligations, thereby leaving a lot less inheritance to heirs.
There are usually only two circumstances where you may be legally responsible for a relatives debts. The first case is when you are a co-signer on obligations of the individual. This would happen when you and the deceased were co-signers on a loan such as a credit card account or a property mortgage. In those cases you were jointly and severally (together and individually) obligated. Just because one of the parties obligated for a debt passes away, it does not relieve the surviving party of their responsibility.
The other possible obligation scenario is if you are the spouse of the deceased person and you live in what is referred to as a “community property” state. These states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. If you live in these states and your husband or wife dies, you will want to seek counsel from an estate attorney.
Another issue comes in feeling a moral obligation to pay a deceased relatives debts even though there is no legal obligation to do so. Before you consider this option you should take into consideration how the loss of the funds in question will affect you and your familys current and long term security. In addition, you should recognize that companies that loan money know that a certain number of their debtors will pass away owing them money. They compensate for this reality in the fees and interest they charge their entire customer base. So, the pay off of debts owed by a deceased person, by a relative, can be viewed as bonus profits for the company in question instead of an unexpected loss.
You will note that most companies protect themselves from the possibility of loss by getting multiple signers on debt instruments and placing liens on collateral such as real property, automobiles, equipment, etc so that they can either take ownership of the assets or force their sale in order to satisfy the debt. If you choose to pay off a relatives debt when you have no legal obligation to do so, that is your choice, but be sure to consider all aspects of the action before you do so.
Relationships With Credit Are You And Your Partner Ready For It?
As you found the love of your life at last, one of the most acute problems that your couple faces is how to manage the both partners’ finances. It is usually no easy for the partners to determine how they will spend together and how they will own the property in possession. There are some guidelines to help couples organize their spendings according to their choice and lifestyle and the way they make their relationship.
– You and your partner are free to share or not share your property and earnings. There are a number of models to organize the financial aspect of your relationship:
– You spend as a married couple: that is you have joint accounts and are both reliable for payments, plus both of you are involved in the ownership. You also make credit card applications in both names, building a joint credit history.
– Partnership for spending: you can get joint accounts for certain expenditures, such as rent or household payments, on other needs each of you spend on your own.
– Keeping independence-model: each partner pays for himself and you manage to pay for mutual needs (household, food, holidays) in turn or making equal contributions.
When living together, young people can’t usually do without big purchases. A TV, a sofa or a washing machine sooner or later the couple gets in need of such sort of things. No wonder, a loan or a credit card plays the main part in this case. It goes without saying you should be careful and wise to play it fair and safe. Remember, you should be 100% sure of your partner before putting your name on an application or agreement.
These are some possible threats that each of you should be aware of when some of you decides to apply to the bank.
– Be careful becoming a co-signer. If your partner fails to pay off the debt or you fall apart, you will have to pay off the balance, as a second responsible person. Besides, it is fraught with damage to your credit score.
– Joint accounts for credit cards or loans seem to be a good option, but not in cases when the relationship is unstable and seems to be not to last long. Though in this way you can build your credit rating together and both of you are responsible for payments, there are pitfalls to beware. If some of you fail to pay or exceed the limit, the other’s credit history can be damaged and he or she will have to pay the balance and all the penalty fees.
– If one of the partners has bad credit, it is required that it should be under repair, in order to prevent future problems with approvals.
– Before taking the decision to apply for mortgage or a car loan, which are long term and money consuming types of lending, you should know for sure you can trust your partner. Mistakes in this matter can cause serious troubles like bankruptcy.
Love has nothing to do with money. So if you want to be protected, it doesn’t mean you do not love your partner. Create your relationship and do not forget about future and financial security.