Objection: What Happens to my Parent's Unsecured Debts After They Die?

[Birdman300]

I'm new to FE. I met with a client who's son was with her in the appointment (he lives with her...age 52). The son kept asking questions about his mother's debts and how those would be paid (unsecured loans, Credit cards, etc.). I understand that with a mortgage loan (secured debt), the lender doesn't really care when someone dies...as long as that payment keeps coming in they're happy. I really don't have enough knowledge to know what happens to someone's unsecured debts after they die, and I didn't have an educated answer for the son.

Honestly, I don't even want to deal with this in an appointment...I want to keep my presentation focused on my client...not her son. In this case I politely recommended he speak to an attorney. HOWEVER, I knew this was a major concern with the son because he thought he was going to get stuck paying her debts when she's gone. I could tell this was her "Why" so I focused on that and I ended up selling a fairly decent policy $100/mo for $13k FE policy and they want me to check back in 6 months to increase the death benefit even more.

Do you veterans to FE run into this often? If so, what do you tell them?

 

[deadhead]

I'm new to FE. I met with a client who's son was with her in the appointment (he lives with her...age 52). The son kept asking questions about his mother's debts and how those would be paid (unsecured loans, Credit cards, etc.). I understand that with a mortgage loan (secured debt), the lender doesn't really care when someone dies...as long as that payment keeps coming in they're happy. I really don't have enough knowledge to know what happens to someone's unsecured debts after they die, and I didn't have an educated answer for the son.

Honestly, I don't even want to deal with this in an appointment...I want to keep my presentation focused on my client...not her son. In this case I politely recommended he speak to an attorney. HOWEVER, I knew this was a major concern with the son because he thought he was going to get stuck paying her debts when she's gone. I could tell this was her "Why" so I focused on that and I ended up selling a fairly decent policy $100/mo for $13k FE policy and they want me to check back in 6 months to increase the death benefit even more.

Do you veterans to FE run into this often? If so, what do you tell them?

It's a smokescreen. Someone else will sell them next week.

 

[smokin goose]

It's a smokescreen. Someone else will sell them next week.

He already sold them.

 

[deadhead]

He already sold them.

Did you already beat me there again. That's ok I will replace your Kemper with a MOO

 

[Life4me]

I found this for you. I hope it helps:

Even if you are not held personally liable for the debt on a credit card, you'll feel the effects of it if you're a beneficiary of the estate. Debts will be paid from the estate before beneficiaries receive any distributions.
There is a specific time period for creditors to file a claim against the estate. When an estate is probated, creditors are prioritized. Credit card debt is unsecured, unlike a mortgage, which is secured by property, or a car that is secured by the vehicle. So it's likely the credit card company will be at the back of the line when it comes to paying debts from the estate.
That doesn't mean the credit card company won't try to recoup the debt from family members, so don't fall for it if you know you're not liable. Taking some pre-emptive action, such as notifying credit card companies that the cardholder has died, will help prevent them from contacting you.
Before any debts are paid out of an estate, including credit card debt, consult your attorney.

 

[Jerard]

If she dies before the house is paid off then the son should continue to make the payments or move out.

If she dies owing on things like credit cards, etc. then not paying them only effects her credit (if it's only in her name). I don't think she's going to care about her credit score when she's dead.

The 13K policy won't help to pay much more than to bury her. Whatever is left I would think the son would spend and forget about her CC debt.

 

[VolAgent]

If she dies before the house is paid off then the son should continue to make the payments or move out.

If she dies owing on things like credit cards, etc. then not paying them only effects her credit (if it's only in her name). I don't think she's going to care about her credit score when she's dead.

The 13K policy won't help to pay much more than to bury her. Whatever is left I would think the son would spend and forget about her CC debt.

You seem to forget, those debts don't quite die with her. That house won't necessarily be his if she died owing credit card debt. They are entitled to go after her estate to settle them. And her house is part of her estate. So unless he can pay, he might not be able to keep the house even if does assume the mortgage.

If he is living in a house owned by her, he is right to be worried about her debts at her passing.

 

[summerof18]

Thank you for this thread, I was also wondering about this. Good to know ahead of time before I run into this also.

 

[deadhead]

You seem to forget, those debts don't quite die with her. That house won't necessarily be his if she died owing credit card debt. They are entitled to go after her estate to settle them. And her house is part of her estate. So unless he can pay, he might not be able to keep the house even if does assume the mortgage.

If he is living in a house owned by her, he is right to be worried about her debts at her passing.

That's all well and good but a funeral still has to be paid for. That's how you close it by remind the prospect that life insurance is exempt from probate. Regardless of whatever debts mama still needs to put put in the ground and how is that going to be paid for. "Now Mrs____how much coverage do you need"

 

[Birdman300]

You seem to forget, those debts don't quite die with her. That house won't necessarily be his if she died owing credit card debt. They are entitled to go after her estate to settle them. And her house is part of her estate. So unless he can pay, he might not be able to keep the house even if does assume the mortgage.

If he is living in a house owned by her, he is right to be worried about her debts at her passing.

I'm sure the CC company can TRY to collect from the estate. But I'm fairly certain that the only thing they can do is get a judgement from a court...and the worst thing that I'm guessing will happen is a lien will be recorded against the property if they debt is not paid. I'm not an attorney but I don't think a court will allow a CC company to foreclose on a house for a CC debt. Mortgage companies are a totally different story...they will foreclose as a matter of policy...and have every right to because it's always clearly stated in the contract...and they already have a recorded lien.