In the past, most American citizens entered retirement owning their homes and completely free of debt. Due to the most recent shift in the world’s economics, this might not be the case in the future. The average debt of the elderly is up by 83% since 2001. This data was released by the federal reserve, so it needs to be taken seriously. At the moment the average debt-holder is standing at $50,000 in the hole.
As you probably guessed, the most significant part of that debt is made up of mortgages. In the past, many people invested heavily in their homes. They borrowed large sums of money, putting those same houses as guarantees. After the real estate bubble burst, mortgages became a heavy burden for most home owners. Although making up a large part of the debt, mortgages aren’t the only financial issues seniors are facing. Another part of older adults’ debt is coming from credit card charges.
Credit Card Debt in the Elderly
Most people associate credit card debt with irresponsible spending on luxury goods that you don’t actually need. But when it comes to older adults, the situation is a bit different. Unfortunately seniors use credit cards, in most cases, only for the sole purpose of surviving.
There are numerous seniors who use their credit cards simply to buy essential goods. They are forced to do this due to various reasons. The most common ones include expensive medications, devalued real estate, and a volatile stock market. According to researchers, 75% of the elderly use credit cards to buy food, prescription drugs, insurance, and to cover their rent, bills, or mortgage.
You must be wondering who is responsible for paying the debt when a senior with a large amount of debt dies? Unfortunately, it falls on family members, but there are exceptions. If you are a co-owner of the credit debt, then you are obliged to pay the debt by yourself if the other co-owner dies. This type of credit card ownership often comes back to haunt younger family members who decided to help their loved one in the first place. What they didn’t know is that they become eligible for inheriting the debt by putting their name beside the name of their family member. The harsh reality comes their way only after their loved one has passed away.
In situations where no one can be made responsible for the debt, it will be paid out by the estate that the deceased owned. The people who are executors of the estate will use the money received from the sale of the given estate to pay the debt. If the money is not enough to cover the debt, it will be wiped out anyway.
Inheriting Credit Card Debt
In some states, there is community property legislation on the books. What this means is that you are going to inherit credit card debt of your loved one even if you are not a co-owner of the card. In those states, credit cards are considered community property. Because of this, the spouse of a deceased person is responsible for the debt of their other half.
In other states, there are exceptions to this. The majority of the states require the spouse to pay the debt that is a product of medical expenses. Because of all this, you would be wise to get legal counsel on the subject of local laws before starting to spend money on your credit card. Your loved one will have to deal with the grief of losing a loved one. Even without counting in the expenses of the funeral, the last thing they need is to have to pay a debt they weren’t even aware existed.
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