There's nothing more satisfying than paying off a loan and closing a debt chapter of your life. At the same time, sometimes paying off debt requires a strategic approach, which can make it difficult for you to determine in what order you should tackle your debts. With that in mind, here's what I know about debt-reduction strategies and choosing what loan to pay off first. Owing money is never a good thing. But in the world of credit scores and money lending, some debts are better than others. Specifically, mortgages, business, and student loans are thought of as good debts because they're investments in yourself or an asset.
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"One Thing Remains"
Skip to content. When someone dies, debts they leave are paid out of their 'estate' money and property they leave behind. You're only responsible for their debts if you had a joint loan or agreement or provided a loan guarantee - you aren't automatically responsible for a husband's, wife's or civil partner's debts. A person's estate is made up of their cash including from insurance and investments, property and possessions.
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However, when you co-sign for a loan or sign up for any sort of joint agreement — such as credit cards and lines of credit — you effectively enter a legal agreement with your creditors in which any debt incurred is the joint responsibility of both parties. If you and your spouse get a divorce, both of you are still equally responsible for any joint debts. From there, you have the option of handling your joint debt in divorce by paying your debts together or separately. You can use joint savings or tap into a home equity line of credit in a jointly owned home to pay off any joint debts. Or, you can liquidate any joint assets — such as a car or a home — and put the proceeds towards your debt. If you and your spouse want to pay your joint debts separately, there are a couple of ways to handle debt payments. The catch here is that each of you will need to qualify for the debt on your own. You can also write a letter to your creditor or lending institution stating that you will pay a certain amount, with the remainder paid by your spouse. To ensure that your credit rating remains intact, you can have your spouse transfer the balance of the debt to a credit card in his name, effectively making him responsible for paying off the remainder of the debt. If only one person incurred the debt on the joint account and is willing to take responsibility, you can ask your creditor or lending institution if one person can qualify for the debt on their own merit.
In practical terms, this effectively means the debt is written off, even though technically it still exists. How long this takes depends on the type of debt. Are you worried about your finances being affected by coronavirus. Read our guide. Don't ignore your debts. There could be serious consequences. Read our guide to what happens if you ignore your debts and get in touch with us for free and confidential debt help. This means the debt still exists but the law statute can be used to prevent bar the creditor from getting a court judgment or order to recover it. If the creditor waits too long, the debt will become prescribed.
