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Inheriting parents' debt can cause financial challenges

Many Tennesseans try to handle their debt responsibly. They attempt to make payments on time, pay debt off in a timely fashion, and communicate with their creditors when necessary. However, life is always unexpected, and sometimes unexpected events throw a wrench in our financial planning. An unexpected illness, job loss, or wage cut can all leave an individual facing tough financial challenges. However, there are other debts that may be thrust upon an individual in surprising fashion, leaving him or her desperate for help.

Many individuals will acquire assets through inheritance. However, individuals who owe debts at the time of their death may have their estate reduced in order to satisfy those debt obligations. Yet, another underlying problem that sometimes arises when parents die is debts on which a child has co-signed. If an individual co-signs on a loan, he or she is still liable for the debt even if the person who took out the loan, say a parent, passes away. This can take some individuals by surprise and leave them in deep financial trouble.

There are many debt relief options out there. These range from self-help budgeting to credit counseling, debt settlement, debt consolidation and bankruptcy. Out of these options, bankruptcy may be the best way to rid one's self of overwhelming debt. Take Chapter 7 bankruptcy, for example. This option allows individual to immediately stop creditor harassment, stop wage garnishment, and completely eliminate debt after certain assets have been liquidated. There are even bankruptcy exemptions that may allow an individual to keep certain property.

Bankruptcy, though, often carries a stigma that many refuse to submit to. But the fact of the matter is that bankruptcy is a common form of debt relief that thousands take advantage of each year to find a fresh financial start. Tennesseans should not feel guilty or ashamed to talk to an attorney about bankruptcy. Instead, they should feel empowered that they can take their financial future into their own hands.

Source: The Hartford Business Journal, "Can you inherit your dead parent's debts?" June 19, 2014

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Mark T. Young & Associates
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Hixson, TN 37343

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