Losing a loved one is an emotionally and financially overwhelming experience.
When dealing with the loss of a father, mother, parental figure, or spouse, settling payments they left is definitely not the first thing that comes to your mind, but it must be attended to anyway. Now that unpaid bills, mortgages, and loans have arrived on your doorstep, you might be thinking, “How can I pay this off? What are the things I can do to earn more money?”
Before you make any decision, you must first gain clarity by assessing your current situation. Other than looking for ways to pay your debt off, acquiring professional help, communicating with the people involved, and sorting out essential documents can ease your financial burden and help you clear out the loans that are not really your responsibility.
Even though times are tough, getting over this hurdle can be easily done with the right approach and mindset. Here are some tips on how you can pay off inherited debts.
Don’t give in to the pressures of debt collectors
After your loved one’s passing, the debt collector may tell you that you’re now responsible for paying on his behalf. When faced with this scenario, you may still be overwhelmed with emotions and end up promising to pay even though you aren’t obliged to.
Whether the loan was made through the help of a family member or a bank, don’t be afraid to tell the collector that you’ll need some time to think before you undergo a transaction.
Acquire the assistance of a lawyer
It is always best to seek the help of experts.
In most scenarios, you should not responsible for fulfilling the debts of a person who passed away, especially if you did not receive any amount of money from the loan made. When a person dies with debt, their properties will be liquidated and used as payment before any inheritance gets distributed.
However, it’s a different case altogether when it’s a co-signed loan or if the payment is required by law. Acquiring legal assistance or advice from a financial advisor can help you get through the technicalities of contracts and will help you clarify which payments are your responsibility.
Organize relevant documents and take note of important details
Organizing documents can take some time, but it will help you clarify things, especially if your parent/spouse’s financial condition is complicated. Your loved one may have transacted with different people and agencies throughout his life. Search for all the necessary documents that can help you gain a better understanding of his financial history.
Take note of important information such as reference numbers of accounts, contact details, dates, and contracts. Sorting this all out can guide you in the process of paying everything off.
Consult with your loved one’s bank and insurance provider
If you are listed as a beneficiary of your relative, one of the first things in your mind should be to check with his banking and insurance provider. Some savings accounts, retirement plans, and insurance policies have a “pay on death” feature that will settle loans automatically.
For the payment process to be smooth, make an effort to clarify everything with the entities involved.
Settle your inherited debts
Settling your debts can be done seamlessly with proper assistance and awareness. Acquiring legal aid and making the extra effort to educate yourself on financial processes can help you handle the pressures of debt. As you move forward, make it a point to adopt excellent financial practices for a healthy relationship with money and to gain comfort when faced with emergencies
AJ Balois is a Content Manager at BPI-Philam, a bancassurance company, based in the Philippines. She’s been working in the banking and insurance industry for seven years. Upon realizing the power of being financially literate, AJ promised to share her knowledge through informative and educational content.