Death and Debt

[Float On]

I can't remember if we've discussed this before and no time for a search.
If a person has a vast amount of school loan debt (but parents didn't sign for that loan) and the person dies; does the debt "go away"? Obviously the person has no assets because they've been paying on the student loan for years.
Not asking for a friend or myself other than UL's about homeless/jobless question got me to thinking about his loan program (which I know transfers if all goes well with the new job offer - yeah!)

[bae]

Who would end up paying it, if there's no estate/assets to go after?

I think it's POOF.

[ToomuchStuff]

Debt falls into one of two categories, secured or unsecured. If no other person is "security/cosigner", then they can only go after all the assets (if any), left, after secured debt has been dealt with. Now there are student loans, I have heard, that will take a percentage of your social security income, if you still have debt then. In that case, I wonder about survivor's benefits, if one would die, leaving a minor child.

Now it doesn't mean you (those left behind, or those who are handling the estate), won't get a call, trying to convince you to assume the debt. A friend was getting those calls, after having to deal with his estranged fathers (who tried to murder him), estate, to keep strain off his grandfather.

[Teacher Terry]

The debt disappears. When my friends daughter needed a liver transplant due to a rare disease at 19 you have to keep up on medical bills or they won’t give it to you. She had her mom’s insurance and also qualified for Medicaid. The bills were enormous and they used all their savings, thought they would need to take the equity out of their home, I did 4 fundraisers, etc. She died 24 hours after the surgery and my friend was not responsible for the remaining bills after insurance paid because she was a adult.

[eleighj]

Float On, based upon your scenario, the loan would be discharged.

[Rogar]

I've wondered about similar situations. Help me if I'm wrong, but unsecured debtors need to file with probate court to recover debt from the estate. I think if there are multiple debtors with debt that that exceeds the value of the estate there is some method determined by the court about who gets paid how much. If the estate doesn't have any value then the debt goes away.

[organictex]

does anybody know if a spouse is liable for their partner's school loan (legally married)
if they die before paying it? i know they will garnish SS of the one who incurred the debt
but hopefully they won't go after a widow/widower?

[sweetana3]

Unless the spouse signed for the debt as cosigner or some such, they are not liable for debt incurred by their spouse. Now whether any company would go after the assets of the debtor is another issue, but not likely.

https://abcnews.go.com/Business/student-loans-die/story?id=19460467

[frugal-one]

Unless the spouse signed for the debt as cosigner or some such, they are not liable for debt incurred by their spouse. Now whether any company would go after the assets of the debtor is another issue, but not likely.

https://abcnews.go.com/Business/student-loans-die/story?id=19460467

What about community property states? Says debt incurred by either party are owed by both even if only one signed the papers?????

[ToomuchStuff]

What about community property states? Says debt incurred by either party are owed by both even if only one signed the papers?????

IANAL. I expect it would depend on several factors. Was the debt incurred after marriage, or before? In joint property states, I expect they could/would go after his half until satisfied (this means a lien on a paid for house, for instance). But best check with a lawyer.

[sweetana3]

It is very nuanced and I have never lived, worked, or had to deal with any issues of a community property state. And now I surely understand those California prenups.