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Americans Are Dying With an Average of $62K of Debt

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    Americans Are Dying With an Average of $62K of Debt

    Woah....

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    Americans Are Dying With an Average of $62K of Debt

    By Christine DiGangi
    Published: March 21, 2017
    Credit.com

    You’re probably going to die with some debt to your name. Most people do. In fact, 73% of consumers had outstanding debt when they were reported as dead, according to December 2016 data provided to Credit.com by credit bureau Experian. Those consumers carried an average total balance of $61,554, including mortgage debt. Without home loans, the average balance was $12,875.

    The data is based on Experian’s FileOne database, which includes 220 million consumers. (There are about 242 million adults in the U.S., according to 2015 estimates from the Census Bureau.) Among the 73% of consumers who had debt when they died, about 68% had credit card balances. The next most common kind of debt was mortgage debt (37%), followed by auto loans (25%), personal loans (12%) and student loans (6%).

    These were the average unpaid balances: credit cards, $4,531; auto loans, $17,111; personal loans, $14,793; and student loans, $25,391.

    That’s a lot of debt, and it doesn’t just disappear when someone dies.

    What Does Happen to Debt After You Die?

    For the most part, your debt dies with you, but that doesn’t mean it won’t affect the people you leave behind.

    “Debt belongs to the deceased person or that person’s estate,” said Darra L. Rayndon, an estate planning attorney with Clark Hill in Scottsdale, Arizona. If someone has enough assets to cover their debts, the creditors get paid, and beneficiaries receive whatever remains. But if there aren’t enough assets to satisfy debts, creditors lose out (they may get some, but not all, of what they’re owed). Family members do not then become responsible for the debt, as some people worry they might.

    That’s the general idea, but things are not always that straightforward. The type of debt you have, where you live and the value of your estate significantly affects the complexity of the situation. (For example, federal student loan debt Opens a New Window. is eligible for cancellation upon a borrower’s death, but private student loan companies tend not to offer the same benefit. They can go after the borrower’s estate for payment.)

    There are lots of ways things can get messy. Say your only asset is a home other people live in. That asset must be used to satisfy debts, whether it’s the mortgage on that home or a lot of credit card debt, meaning the people who live there may have to take over the mortgage, or your family may need to sell the home in order to pay creditors. Accounts with co-signers or co-applicants can also result in the debt falling on someone else’s shoulders. Community property states, where spouses share ownership of property, also handle debts acquired during a marriage a little differently.

    “It’s one thing if the beneficiaries are relatives that don’t need your money, but if your beneficiaries are a surviving spouse, minor children — people like that who depend on you for their welfare, then life insurance is a great way to provide additional money in the estate to pay debts,” Rayndon said.

    How to Avoid Burdening Your Family

    One way to make sure debt doesn’t make a mess of your estate is to stay out of it. You can keep tabs on your debt by reviewing a free snapshot of your credit report Opens a New Window. on Credit.com, in addition to sticking to a budget that helps you live below your means. You may also want to consider getting life insurance and meeting with an estate planning attorney to make sure everything’s covered in the event of your death.

    Poor planning can leave your loved ones with some significant stress. For example, if you don’t have a will or designate beneficiaries for your assets, the law in your state of residence decides who gets what.

    “If you don’t write a will, your state of residence will write one for you should you pass away,” said James M. Matthews, a certified financial planner and managing director of Blueprint, a financial planning firm in Charlotte, North Carolina. “Odds are the state laws and your wishes are different.”

    It can also get expensive to have these matters determined by the courts, and administrative costs get paid before creditors and beneficiaries. If you’d like to provide for your loved ones after you die, you won’t want court costs and outstanding debts to eat away at your estate.

    Remember, estate planning can involve more than just drafting a will.

    Link: http://www.foxbusiness.com/features/...-62k-debt.html
    Last edited by james.hendrickson; 03-22-2017, 11:28 AM. Reason: Formatting
    james.c.hendrickson@gmail.com
    202.468.6043

    #2
    This is a big problem.

    One of the best things a person can do is have their will/last wishes planned out appropriately ahead of time...... and funded! When that doesn't happen I have watched friends/family get stuck with quite a headache getting an estate closed out. That is when they get along, when there is an argument it gets really messy.

    Comment


      #3
      It could be even worse:

      I had a late night discussion with my father-in-law who is upset about a money grab from medicaid. Apparently, they can claim the portion that they paid out of your health insurance out of your estate after you die.

      I haven't heard any horror stories because most people on medicaid don't have significant holdings, but it has been out there since 1993. Here's the link to a fact check site on it.
      -Milly
      Personal Finance Blogger, Mechanical Engineer, and Mother of 3 Toddlers
      milly.savingadvice.com

      Comment


        #4
        Originally posted by james.hendrickson View Post
        about 68% had credit card balances.

        These were the average unpaid balances: credit cards, $4,531
        I wonder how much of this "debt" is just normal outstanding bills. My one Visa bill was $4,700 last month. Had something happened to me and I died before paying it, I'd fall into this statistic even though we pay our bills in full every month.
        Steve

        * Despite the high cost of living, it remains very popular.
        * Why should I pay for my daughter's education when she already knows everything?
        * There are no shortcuts to anywhere worth going.

        Comment


          #5
          Originally posted by disneysteve View Post
          I wonder how much of this "debt" is just normal outstanding bills. My one Visa bill was $4,700 last month. Had something happened to me and I died before paying it, I'd fall into this statistic even though we pay our bills in full every month.


          I didn't google statistics but I CAN ASSURE you that that number is not a large percentage of people like yourself, we live in a credit based society/economy. same as the US and every country out there printing money out of thin air, essentially using your credit card and carrying a balance is the same thing
          retired in 2009 at the age of 39 with less than 300K total net worth

          Comment


            #6
            Originally posted by 97guns View Post
            I didn't google statistics but I CAN ASSURE you that that number is not a large percentage of people like yourself, we live in a credit based society/economy. same as the US and every country out there printing money out of thin air, essentially using your credit card and carrying a balance is the same thing
            I'm sure I'm in the minority, but I'm sure that's a piece of it.

            Another thing to consider, being optimistic, is that "death" doesn't only mean elderly and retired. People die at all ages. I just heard today of a school nurse who died recently of a heart problem at 34 years old. She probably had a mortgage, student loans, car loan, etc. But she was 34, no it's not like she was being irresponsible if she had those debts. My father in law was in his 50s when he died of lung cancer.
            Steve

            * Despite the high cost of living, it remains very popular.
            * Why should I pay for my daughter's education when she already knows everything?
            * There are no shortcuts to anywhere worth going.

            Comment


              #7
              I can imagine that someone who did not die suddenly might have put a number of non-prescription medical, safety, and comfort items on credit card in the months or weeks before death. Even things like several extra changes of sheets can be needed and can raise the credit card balances pretty quickly. Or even paid airfare for a relative to come help them. I don't think using the credit card at the end of life is a bad thing to do. Assuming there is an estate, the bills will get paid out of the estate, which is fine.
              "There is some ontological doubt as to whether it may even be possible in principle to nail down these things in the universe we're given to study." --text msg from my kid

              "It is easier to build strong children than to repair broken men." --Frederick Douglass

              Comment


                #8
                This story & thread is a big to do about nothing. It is highly unlikely that creditors are losing sleep over this. For them, it is just a part of doing business.

                Comment


                  #9
                  I guess thats one way to get out of student loans...die and make sure you never had a cosigner.

                  Comment


                    #10
                    Thanks for bringing the issue of estate planning to the attention of SA readers. Unless someone has had to work on an estate, they generally have little understanding of how elements like Advance Directives, Life insurance, Wills, and some system for bill paying are all desperately needed by those tasked to complete legalities with an overlay of emotional distress.

                    Horrors happen and I sincerely hope participants check details, [your beneficiaries of retirement accounts, imbedded mortgage & car loans insurance, life insurance policies at work and via an agent, appropriate Will, Advance Directive and possibly Revokable Trust]. They needn't be fancy, they need to be done. A basic on-line kit is a good starting point.

                    In hopes of being helpful, I suggest readers grab a 3 ring binder and add a package of page protectors. Copy and paste suzieormandotcom or similar list of legalities, edit and print the list applicable to your circumstances. Add applicable details and documents to create the package needed.

                    Comment

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