What Happens To Your Credit Debt?
Much of what happens with your credit depends on who is connected to your account. For example, if you have a cosigner or a shared account, the other person listed on the account is responsible for all of the remaining money owed, no questions asked. In fact, that is one of the primary risks of being a cosigner on an individual's line of credit.
Credit agencies are allowed to go after your estate. If you have a great deal of items you owe, especially items that are still in debt (though homes, cars, savings, etc. are considered part of your estate even if they have been paid for in full) then banks will try to take what they are owed out of your belongings, starting with any money you have saved and moving on towards what you own.
Credit agencies can and will do whatever they can to go after the money that you owe. Their business depends on finding ways to get people to pay back their debts regardless of financial status or, in your case, life.
(Note: There are a few exceptions. School loans
, for example, are void if you pass away. But if you have refinanced the school loan under a new lender then the loan may still be subject to collection). What Credit Agencies Can't Do
Despite being allowed to pursue what they are owed, their scope only goes as far as you, your estate, and all those who have cosigned onto an account with you. After that, they have no scope.
Many credit agencies, however, try to go beyond the scope and pursue your family, claiming they can force your family members to pay back the debt. This, however, is not allowed. Family members that are not part of a joint account have absolutely no responsibility to pay back their loved one's debts, regardless of the amount that they owe. Dealing with your Death
The amount you owe is still outstanding, and if you were hoping to pass a hefty inheritance to your family on your passing, you will be unable to do so if the money you have saved is going to be transferred to your creditors.
In addition, if your spouse was jointly invested with you, she or he will still be subject to the debt repayment , and any money the two of you have saved for your passing will immediately disappear.
But at the very least, your family members are not forced to pay back any debt or loans they did not cosign for. So make sure your family members know that if a bank or lender tells them that they must pay it back they know they do not need to pay it and need to send the bank the death certificate.