Do you know what happens to outstanding debts when you die? Your unpaid debts and the types of indebtedness will impact the net worth of your estate.
Like millions, you rely on credit to pay for major expenditures, such as automobile or medical expenses. South Carolina has specific laws that outline the financial responsibility of a deceased person’s debts.
Statute of limitations
South Carolina includes all forms of debt under a three-year statute of limitations. This covers outstanding medical bills, bank loans, credit cards and mortgages. The date of your last missed payment determines the date of default. By adding 30 days plus three years, you can determine when the statute of limitations will expire. Yet, the debt is still owed and will show up on your credit report for seven years. Interested parties must appear in court to prevent a judgment against the estate. Additionally, certain actions can restart the statute of limitations, including agreeing to a settlement. Acknowledgment of the debt or making a payment will also restart the three-year clock. Any judgment set against you has a 10-year statute of limitations.
Mortgage and credit card debt
The names on your mortgage and your marital status are factors when settling your estate. If a spouse or another family member is a co-signer, she or he will assume legal responsibility. Yet, if it is in your name, your estate will pay off the mortgage. Additionally, a surviving spouse who in not on the mortgage can assume ownership. That person must be become qualified by the lender to do so. Likewise, unless an account has a co-signer, your estate pays all credit card debt.
Have an estate plan in place to ease the burden on your family members and protect your assets after you are gone. State your long-term objectives for your property. In doing so, you can avoid potential conflicts that can arise after a loved one departs.