Can unpaid student loans survive your death?

[no_hypocrisy]

In other words, if you die, can your unpaid student loans be a lien against your estate? I know they can survive bankruptcy.

[fasttense]

1. Only if you have anything leftover when you die.

When I first read your post I thought you meant your children or relatives would inherit your debt. But of course we don't have inherited debt in this country....yet.

[KharmaTrain]

2. I'm No Lawyer...

...but I've been through my share of estates and to my understanding if you still owe on a loan your creditors do have a right to put a lien on the estate. It would be taken from the sale of your assets. If you don't have any or the amount is less than the loan, they're SOL.

[no_hypocrisy]

3. Thanks. I thought so. Just another creditor.

[SharonAnn]

16. Student loans are different. They're not "just another creditor".

Someone who knows the "facts" could best tell us, but I recently heard of parents who are paying on their deceased child's student loans.

And, because they can't be discharged in bankruptcy, they might be applied against the estate (if there is one).

[ejpoeta]

4. what about insurance policies? i have student loans and i have

a credit card. i do not have any assets like a house. if i died tomorrow, and i had an insurance policy, could they take that? And if you are married can they then just go after your spouse?

[FormerDittoHead]

6. Insurance policies don't count. My late brother...

My brother died 4 hours before his retirement! Still employed, he had $300,000 life insurance (which at 65, was quite a benefit!)

It turned out, to everyone's surprise, that he was up to the gills in debt. Everything. He was getting cash advances from credit cards to make the minimum payments on other credit cards. He had borrowed hundreds of thousands from his friends and neighbors.

He owed over $200,000 to credit cards alone.

Anyway, his daughters got all the life insurance, but most of the lenders were shafted as the credit cards got to be first in line.

NOTE: this was NOT "Whole" life, which I would never recommend.

PS: the insurance money was also tax free.

[tammywammy]

8. No

Life insurance is passed directly to another person, it is not part of the estate. As for a spouse, if it's not a co-signed debt, it would still go to the estate, but during probate the estate may be made to sell off assets in it to pay the debt. If anything is co-signed, including private student loans, the debt would go to the co-signer.

[pstokely]

19. If there is a Co-Signer

nt

[WolverineDG]

9. Unless the beneficiary is the decedent's estate, no

proceeds pass to the beneficiary listed in the policy. They are not considered to be part of probate, as they are not the decedent's property. Unless, of course, the insured named his/her estate as the beneficiary.

dg

[KharmaTrain]

10. If There's Cash Value...

They can't take what you don't have...and if there's any cash value on that policy it could be listed as an asset. To my knowledge the only way they could go after your spouse is if the debt is on a joint account, not if it was just in your name.

It'd be well worth your while and hard-earned money (and peace of mind as well) to speak with a tax or an estate attorney who could be far more specific and authoritative than someone on a message board. I wish you all the best...and best to ask these questions than to face surprises later.

[ejpoeta]

14. thanks to you and everyone else. i know this is just a message board and take it for what it is.

i don't know the first thing. i am a stay at home mom with three young kids. i don't plan on going anywhere, but as a parent i worry about those kinds of things. i guess it probably would be a good idea to go to an attorney for bob and i both to see what's what anyway. we have never done such a thing. hell, we've been together 16 years and just got around to getting hitched going on 6 years ago. the most discussion we've ever had was when that whole schiavo thing happened and i said i don't want to go live like that and i made sure everyone knew it!

[tammywammy]

15. Married and with children

It's very important to get your estate in order just in case anything happens, and that includes a will, plus it seems like you'd like a living will. Once you get it done once, then you can annually check all your documents to make sure nothing has changed.

[ejpoeta]

17. yep. we always wait until we are lying in a bed with people fighting in a court and some

guy we don't know using us as a prop. my family isn't like that though. but you never know. better to have it on paper. thanks!

[KharmaTrain]

21. You're Doing A Smart Thing...

Too many people fear the future and thus avoid truly planning for it. I can't blame 'em...felt that way myself until my parents were in their last days. They planned well and it made life a lot easier for me...and also where I gained a lot of my knowledge in this area. Unfortunately things happen and not at one's planning so if there are questions you have best to ask and have them answered. It might not be what you want to hear but it can give you an insight on where you need to go.

Life moves quick...16 years can turn into 25 before you know it and then 35...enjoy all that you can and here's wishing you all the best.

Cheers...

[W_HAMILTON]

5. I suppose it depends on the type of loan...

There may be different rules for "private" loans, but for the federal student loans, it lists death as one way the loans may be discharged.

Now, how they set the bar on that I'm not sure -- you'd probably have to ask someone with actual experience with this. Do they automatically discharge your debt upon death? Do they try to collect what they can and discharge the rest? How hard ass they are about it, I'm not sure.

[tammywammy]

7. It depends on the type of loan, but for federal loans - no

Death Discharge
Cancellation because of the borrower's death (or, in the case of PLUS Loans, the death of the student for whom the parent borrowed) is based on an original or certified copy of the death certificate submitted to the school (for a Federal Perkins Loan) or to the holder of the loan (for a FFEL or Direct Stafford Loan).

http://studentaid.ed.gov/PORTALSWebApp/students/english/discharges.jsp

If it's a loan taken out with a private bank there isn't a set rule. It could go to the estate.

[kick-ass-bob]

11. I have Stafford loans and so does my wife.

The agent told us to never, NEVER consolidate them together (mine and hers) because he said if you did, and one person died, the other would still be responsible for paying that debt. With them separate, he said, the loans for the decedent go away.

[tammywammy]

13. I would double check that advice.

I'm still in school so I wouldn't consolidate for another year or so, but I've never heard that. I'll have to check on that.

Edited to add: I read your post again and see you were referring to consolidating your loans with your spouse. They don't even offer that any more. You and your spouse can still separately consolidate your loans and the death 'benefit' remains the same.

[madrchsod]

12. yes...

[pstokely]

18. If you have co-signers, they can

nt

[Manifestor_of_Light]

20. They can sure as hell take it out of your Social Security check.

[dems_rightnow]

22. Federal loans- absolutely not

Fully discharged upon death. Not paid by the estate. Not paid by a co-signer.

http://www2.ed.gov/offices/OSFAP/DCS/loan.cancellation.discharge.html#Death
http://www.studentloanborrowerassistance.org/loan-cancellation/disability-and-death/


That's The Word. Other people appear to have been making it up as they went.

[woo me with science]

23. Shhhhhh.

That's something they can change...