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22 Aug 2012

Debt Doesn't Transfer to Loved Ones in Death, But Family May Still Suffer

Bereaved family members have enough to contend with when someone passes away without having to shoulder the burden of left-over debts.

You should know that you aren't responsible for debts that weren't in your name or that you did not co-sign for. That doesn't mean widows and widowers especially won't suffer a financial blow.


Here are some things you need to know:

The credit card companies and other creditors have the right to collect their payments from the deceased person's estate. If it's a secured debt, such as a vehicle payment, the vehicle may be repossessed and resold, with the remaining balance, if there is any, billed to the estate.

However, if there is not enough to cover the debt from the estate, creditors are generally out of luck, and must eat that cost.

If it's unsecured debt, such as a student loan, creditors can still collect the remaining balance from the estate.

Of course, this may affect any beneficiaries of the estate as the amount they can collect will dwindle based on the debts owed. However, beneficiaries won't be held responsible for the remaining balances on bills if the estate won't cover it.

However, there are some exceptions. If your spouse passes away and you had multiple joint accounts, joint debts or had co-signed for some of those debts, you can still be held responsible for the entire amount. This is often a harsh reality when spouses die, particularly because your income has effectively been halved (or more) by your loss, but your expenses haven't decreased.

You may be able to offset some of that cost through any life insurance policies you may collect, but that may not cover everything.

This is why many widows and widowers end up filling for Chapter 7 bankruptcy in the wake of a death, particularly if the deceased was the primary wage-earner for the family. Adjustments must be made in your monthly costs in order for you to get by. Sometimes, the only way to get rid of that debt is to have it erased in a bankruptcy.

Stephen H. Swift

Managing Attorney
Law Office of Stephen H. Swift, P.C.

Client Testimonials

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    "My attorney (Matthew Hansen) is a very kind person.  I felt very confident in his skills. He is very knowledgeable and efficient.  He didn't make me feel embarrassed to be filing for bankruptcy.  Thank you Matthew!  Laura was very friendly, and everyone I interacted with was very nice and helpful as well." 

     

      –  Sherry M., Colorado Springs, CO

     

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    "Steve explained things well so you know what you're doing.  The staff was very helpful with everything, including the paperwork." 

     

      – Raymond & Rhonda P.,                         Colorado Springs, CO

     

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    "From the first time that I entered the office, I was treated with the utmost respect. It was like I had been knowing all of the employees for years!! Every person that I came in contact with was extremely courteous!!!

    I rate my overall experience a 12!! And I wouldn't change a thing on the website.

    Cris is absolutely wonderul!! While Alicia was extremely courteous and humorous!!!  Stephen (Swift) was extremely professional and courteous. One of the nicest gentlemen that I have Had the pleasure of working with. I can't thank him enough."
        

      – Pete, Colorado Springs, CO  

     

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    "Upon my first visit to the office, I was in an unfamiliar part of town.  I was also bewildered and experiencing anxiety.  I was not even sure I should be there or how to proceed in a very new situation where my back was against a wall.  The first person I met in the office was the lovely receptionist.  I have to say that she has the absolutely right demeanor and is extremely successful in her position.  She has a slight but comforting smile and persona.  She is confident but not arrogant in processing the needs of clients.  I do not feel that this is a small achievement in any way.  I feel this person in many ways sets the tone for the office as the gate keeper of the office and emotional clients.  She definitely helped me thru this process with her silent and dedicated service to me, the clients and the office."

     

    John C., Colorado Springs, CO

     

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    "Upon entering Steve's office, one immediately knows they have entered his "zone".  Steve will talk, think, contemplate, then act.  He then spins his chair around, garbs paper, types on the computer and zaps something thru the printer.  Occasionally, a document needs to be scanned or something else from outside the office is needed, and Zap someone appears without having to yell down a hall or call out.  There is definitely a team here that is in sync.  There may be a question out of the blue suddenly or a brief conversation about something else.  The whole time, Steve is on point.  I felt from day one, a trustworthy confidence in placing my future in his hands.  I was not wrong.  I also never once felt rushed, brushed off or that my concerns were not his.  I felt that Steve is in this for me and his clients.  I have a debt, gratitude and confidence in Steve and the Swift team that far exceeds the fees pain." 

     

      – John C., Colorado Springs, CO

     

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    "Thank you to everyone who worked on my case.  My driving priviledges are now restored and I have a fresh start.  I am very grateful to the Swift Law Firm!   Everyone was very kind and helpful and easy to talk to.

    Ward was very knowledgeable and knows the pros and cons of your case. Definitely a man to listen to concerning your case, and he was very helpful!

    Matt Hansen is a good man, very helpful, gives good advice  AND he is willing to go the extra mile.  Steve Swift is a man of action who knows his profession.  He lifted a heavy burden, and I cannot thank him enough for an excellent job!"  

     

      - Henry R., Colorado Springs, CO  

     

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