Wednesday, July 18, 2012

Don't Leave Cash Advance and Credit Card Debt To Your Heirs

Ever worry about what happens to your debt after you pass away? I'm sure it is not on the list of stresses when seeking out a cash advance or hoping to get another credit card approved. Financial situations are what they are and when trouble arises, most of us do what we can with what is available.

Unless a person has a well-developed retirement plan, life after retirement often times increases the amount of debt just to cover everyday living expenses.

Problems with some retirement plans:

*There wasn't enough put away.

*No plan was ever made.

*Inflation was never considered.

*Didn't account for extended lifespan

*Medical costs were greater than expected.What does a retiree do with debt? Efforts are made to pay down the debt do help, but too many people in retirement are obtaining additional debt instead. Credit cards or cash advance loans usage to help pay for everyday living expenses and/or emergency payment cancel out efforts to rid debt.

What measures can be taken in order to prevent debt from haunting heirs? One of the most difficult aspects of debt is admitting to yourself the total amount owed. The next step is to admit to your heirs what kind of debt you will be leaving behind. Whether there will be an estate left behind or not, sharing the financial information will help your heirs prepare for what might be to come. You don't need to disclose everything to everyone all at once; it still is your private life. Keep passwords and account numbers to yourself until disclosure is appropriate and necessary.

If you have a home to leave and there is still debt attached to it, you may want to purchase insurance to help your heirs take care of the debt. The outstanding balance on a loan for any asset will be transferred to the person who inherits it. Without the insurance money, this loan asset will need to be sold and the debt paid off or the person will need to transfer the debt to their name.

Creditors will try to get their claws on any bank money. Insurance money is usually exempt from their taking. Some states which allow this money to be used to pay debts often times have set limits on how much can be taken.

When filling out your will, name a person as the beneficiary not the estate. Estates fall into the hands of the probate courts which may distribute money and/or assets to creditors. If you want to leave accounts or property, leave it to the individual's name.

If life insurance is too expensive due to age or illness, consider loan protection insurance. This money targets loans like credit card balances, auto loans and even a mortgage. It is a more affordable option for those looking to cover the specific debts.

If you can, start paying down debt. Keep from making new debt. Limit credit cards and cash advance use. The less debt you leave an heir the better. Your heirs will only be responsible for the debt if their name is on the account. Joint accounts or guarantors on a loan would make them responsible for the balance once you are gone.

1 comment:

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