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Considering Chapter 7 to erase late-life debt

It has been estimated that some 75 percent of all consumers pass away with debt still outstanding. Credit card debt, as well as other forms of debt, do not simply disappear when the borrower dies, as these obligations then become the burden of the estate. This is why some Kentucky residents may wish to consider a Chapter 7 filing if debt remains a consistent struggle in late life, to avoid passing it on to family members. 

Generally speaking, a family member will not be required to personally pay the debts of the deceased, though in some cases they will find themselves responsible. If a spouse or other family member has co-signed for a loan, jointly owned property or is otherwise required by law to pay the debt, the debt will fall to that individual. While an authorized credit card user will not typically be held responsible, a joint cardholder will. 

A probate court typically oversees the deceased individual's financial affairs unless a living trust or other arrangements exist. The probate process can be quite complicated and is often very case-specific. For example, a life insurance policy will go to beneficiaries before it is applied to debt, but beneficiaries may not be allowed to accept money until debts have been paid. 

The process of paying down debts after a borrower has died can be quite complicated, and some Kentucky residents may not wish to leave this challenging situation to be handled by surviving family members. This is why it can sometimes be a good idea to consider Chapter 7 bankruptcy as an option for clearing debts later on in life. An experienced bankruptcy attorney can walk the borrower through the process and help to ensure that debts are paid down or discharged altogether before probate becomes an issue. 

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Law Office of Ginger C. Cord, PSC
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Lexington, KY 40507

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