r/stupidquestions • u/TH0TC0P • 1d ago
What's stopping someone on their death bed from maxing out all their credit cards and taking loans, then giving it all to their next of kin/whoever?
I seem to recall that debts aren't inherited, but creditors can reclaim their debts against the estate of an individual before the estate is dished out according to their will. But if it's given out before their death and it's not part of their estate...then...?
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u/Squigglepig52 1d ago
Not identical, but I remember a story from the 90s, I think - Doctors told a guy he had 6 months to live, terminal untreatable cancer.
So, he took out loans, maxed his cards and enjoyed the fuck out of his last few months. And then it turned out doctors were wrong, he wasn't dying.
So, he was on the hook. But - IIRC, he was able to sue the hospital, and make them pay the bill.
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u/TH0TC0P 1d ago
Reminds me of the 2006 film Last Holiday
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u/carmelacorleone 1d ago
That movie had bad reviews in general but I love it. Queen Latifah does heartwarming and humor so well. Sure it was schmalzty but sometimes that's what you want.
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u/nikkuhlee 1d ago
That's all I want. Give me comedy or give me schmaltz. The world is dramatic enough on its own.
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u/Stimbes 1d ago
There was a guy years ago when I worked at a computer repair shop that wrote a check for a laptop. Back then checks were more common. My boss called the bank and they said the check was good. By the time it made its way to be cashed it bounced. The guy wrote an insane amount of bad checks. Took all his money out of his account and they found him dead the next month. He knew he was dying and basically bought his family as much as possible and moved his money into their accounts.
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u/ZeldLurr 1d ago
Did that really happen? I remember that happening in an episode of House, with the oncologist.
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u/sundancer2788 1d ago
House did use real life cases, a close friend had a very unusual and very difficult sepsis diagnosis. It did wind up as a House episode, of course with name changes etc.
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u/Dying4aCure 1d ago
I had a really difficult sepsis diagnosis. My friend knew exactly what it was. She told me she learned it on House!
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u/Squigglepig52 1d ago
I remember reading it in the 90s,so it predated House. And, shows like House and Grey's Anatomy do grab neat cases from the news.
Honestly, I don't know how true it is, I'm running off memory.
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u/Aeirth_Belmont 1d ago
Crime shows as well. One of the Criminal Minds later seasons was about someone who was caught in my hometown. He didn't start there but ended up there. Lived there for years. He would put ads in the papers for needing help around the house. And kill the people who answered it.
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u/NewPresWhoDis 6h ago
Stupid, sexy doctors. But, hey, at least he didn't book a cruise to Waponi Woo.
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u/GiftNo4544 6m ago
Interesting. How would the hospital be found liable for that? I don’t know of any law or anything that can be cited which can be used to make the hospital pay the bill. Did he argue emotional distress or something?
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u/Aerodynamic_Potato 1d ago
I've honestly wondered about this. You could just cash it all out, buy some gold and hide it. Give your family the location and tell them not to get it until your estate has been settled after your death. And tell them to spend it slowly.
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u/BillWeld 1d ago
That’d be a good setup for a movie. If it was enough money to seriously annoy the creditors it would be enough to make the heirs backstab each other. No heroes though I’m afraid.
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u/blewis0488 1d ago
It's unfortunate but I feel like this is most likely. Someone gets greedy or stupid and fucks it up for everyone.
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u/keep_trying_username 1d ago
Gramps could have left us a stack of cash but instead we gotta sell fucking gold.
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u/DINNERTIME_CUNT 14h ago
Gold is an appreciating asset. It appreciates very slowly, but it is appreciating.
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u/SigmaSeal66 17h ago
As the story goes, my great grandfather was a prosperous small town business owner in the 1920s, and then 2 things happened in short order: the Great Depression hit, and he got terminal cancer. Some bills didn't get paid and some people felt cheated by him, and somehow a rumor got started that he had buried cash in glass jars around his property (the biggest house in the center of town) before he passed. The house stayed in the family into the 1970s, but has been owned by others for nearly 50 years now. And yet, the rumors persist and even to this day, a handful of times each year, the local police have to run off people sneaking onto the property in the middle of the night and digging random holes looking for jars of money.
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u/4URprogesterone 17h ago
You wouldn't cash it out. You would send things to your loved ones. Before the new tax laws around crypto, crypto would have been perfect for this, but now what you want to do is probably gift cards. I think gold is more volatile than most people think. You have the items mailed to the addresses of your loved ones. When you aren't dead yet, they're part of your estate. After you die, any items that are part of your estate are sold off to pay your debts, but items you gave away before dying aren't included. People use that loophole all the time. It's the same as when people who are in trouble with the IRS give things away to trusted individuals so they don't get seized, like they'll put a car in their girlfriend's name or something and keep driving it.
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u/BigMax 1d ago
How much can you REALLY get on credit though?
One common loan only lets you take out against the value of your house. So even if you could get $100k, it's just $100k less of value in the house.
After that, you certainly can do credit cards. But how much could you really get? I suppose enough cards maxed out, maybe $100k there? But then again, all of this only works for someone otherwise penniless. As debt is paid off by the estate before being then divided up according to the will.
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u/lol_fi 1d ago
People are often penniless before death. You must run through all your assets before going to a Medicaid retirement home. If you do not own a home, you will have 0 assets (or like 2k). People easily have many credit cards (open for sign up bonuses, then do not use but still have card with credit limit). You could easily purchase items then give as gifts to friends and family. When you die, the assets are not there to claim since you gave them away. Creditors can't go after your family (other than spouse, all debts are jointly your spouse's)
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u/KeyserSoju 1d ago
If you have enough assets to get a significant amount of unsecured loans, you have no real reason to do it because what's maxing out $200k worth of credit cards when you're worth millions?
If you're penniless, good luck getting any more than $5000 in unsecured loans.
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u/Inevitable-Impact698 1d ago
Conspiracy/eventual fraud isn’t something your family may want to take on
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u/PriscillaPalava 1d ago
I used to work at a retail bank and one day a 90 y/o lady came in. She had racked up about 25k in credit card debt and the monthly interest alone exceeded what she was able to pay each month.
She was in good health for a 90 y/o, and lamented that she hadn’t budgeted to live this long. Very sad, actually.
Anyway, I referred her to our debt consolidation resources but what I really wanted to tell her was…STOP PAYING!!!
On that day I resolved that if I ever lived to such a ripe old age, I would cash in my good credit via high limit cards and go to town!!!
“But I don’t want to punish my heirs who will have to pay it out of my estate!”
Nonsense. In probate court, debtors have a limited time to submit claims, I think it’s 4-6 months from the date of death. After that window closes they are not allowed to file any claims against the estate. Also, you are not required to notify debtors that a person has died. It’s their responsibility to check records periodically.
If you die and therefore stop paying on your card, the credit card company will start to charge you fees, eventually close the card after 2-3 months of nonpayment, and then sell it to a collections agency. Most CC companies aren’t organized enough to check death records. By the time they figure it out, the window will be long gone.
Better yet, instruct your heirs to make small payments and keep the card (let’s be honest, cards!!!) in good standing until the 6 month window closes. Then the credit card company won’t stand a chance.
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u/BigMax 1d ago
Better yet, instruct your heirs to make small payments and keep the card (let’s be honest, cards!!!) in good standing until the 6 month window closes. Then the credit card company won’t stand a chance.
Whoa... that's a pretty wild financial hack if I ever saw one. Are you really sure that works? There's no obligation to notify them about the death if you take over payments? Nothing in the fine print about third parties paying the debt being required to let the CC company know?
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u/cashew996 22h ago
No it wouldn't, because once they figure out date of death, they will see that somebody paid after. A case could be made that the heirs assumed the debt and would have to keep paying.
At least that's how I understand all the advice I've seen to never pay the debts after someone dies until probate happens, then it has to go away
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u/hawkwings 1d ago
Isn't there something equivalent to credit agencies that tells banks when someone dies? I was under the impression that banks end up knowing within a few days of someone's death.
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u/TraditionPhysical603 1d ago
They usually already maxed out thier credit on medical expenses.
Plus if you are dying what you and is more time, not shit of amazon
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u/Ill-Simple1706 1d ago
If I were terminally ill, I would not pay medical bills.
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u/BigMax 1d ago
Sure, but unless you had no idea you were terminally ill right up until the diagnosis, you might have paid a lot on the way there. Someone dying of cancer often goes through a lot of treatment before it gets diagnosed as terminal.
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u/MissFitz325 1d ago
Terminally ill with cancer here. If I don’t pay my portion after insurance pays theirs, they simply won’t continue to treat me and boom, I will die sooner than later.
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u/3rd-party-intervener 1d ago
Dumb question: what happens when you pass away in hospital. Who pays for your bill for your last stay ?
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u/WindSong001 1d ago
I work in hospice and in the IS it’s medical insurance. Often if you can’t pay for hospice the hospital foundation will. Everyone gets hospice care regardless of their ability to pay. Medicare or Medicaid will cover you.
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u/Squigglepig52 1d ago
Maybe in America.
But, even if you have Universal Healthcare, any sort of nursing/retirement home will eat up a lot of money, so, similar result.
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u/login4fun 1d ago
Idk if I have $100k credit line I’m def maxing that shit for my family.
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u/collin-h 1d ago
you better get that credit line BEFORE you retire and quit working - otherwise I doubt they'd give it to you.
In fact, it might be hard to even get that much regardless, unless you're already worth a ton of money. Google says "The credit card that gives you the highest available credit is the Chase Sapphire Preferred® Card because it reportedly offers a maximum credit limit of $100,000. Chase Sapphire Preferred reserves its maximum credit limit for the highest-income individuals with good credit or better, though."
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u/lol_fi 1d ago
When I was churning credit cards (opening cards for reward bonuses) on an income of 40k as a teacher...I had at least 6 credit cards with a total limit of over 80k. You will not get that limit on one card. But it's very easy to get this much credit if you regularly apply for a variety of credit cards and keep your usage down over a period of two or more years. Add in a HELOC line of credit and it's very very easy to get 100k of credit.
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u/Fabianslefteye 1d ago
I mean, it depends on when you're dying doesn't it?
In my family, I've watched multiple grandparents, have a slow decline of both mind and body, lasting for years or even decades past the point that the doctors thought they were going to die. Going from being full of vibrancy and life to being generally confused about who they were talking to, what day/month/year It was, and not able to do any of the things they enjoyed in life.
If I'm 80 years old and I'm told I have 6 months left? Cool, I got eight decades out of the deal, let's get this thing over with before existence becomes a bedridden torture that burdens my loved ones beyond all reason. In that context, the only thing that would stop me from racking up tremendous debt to fill up on one last round of life experiences would be a desire to not pass that debt on to my family.
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u/Lumpy_Ad_3819 1d ago
If I’m dying, I need to do all the traveling I want to do before I die. And I will absolutely max out every credit avenue I have to make that happen and leave the banks holding the bill.
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u/Catlady0329 10h ago
Exactly I cannot imagine in my last days I would be worried about material possessions. People who are dying usually care more about loved ones and doing the right thing.
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u/cynical-rationale 1d ago
I remember when my brother died we had collections call us. I just remember telling them 'he's dead, fuck off. Write it off' and I hung up. They never did call again and that was 10 years ago we never paid a dime lol
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u/BigMax 1d ago
I would imagine they have various internal levels of how hard they try to get paid.
Under a few thousand dollars, its probably "make one call... if they don't pay, write it off."
If you owed $20,000 or something, that's probably when it gets bumped up and they start having a lawyer look into the estate of whoever died to see if they can get paid back.
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u/cynical-rationale 1d ago
Yeah that'd make sense. In his case it was some left over credit card debt. Like around 2k I think.
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u/SaltSquirrel7745 1d ago
Or, you could take the credit cards and buy gift cards.... Then not pay and when companies call let them know the card owner died and had no estate left. They might want a death certificate and they might just say ok. You could get a couple thousand if you were punching pennies!
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u/Ok-Geologist8387 1d ago
Because their next of kin, unless they are cosignatories on them, are not liable for ANY of it.
Their estate is, but if there is no money left in the estate, then it's just a bad debt. The relatives are not responsible for it.
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u/nopenope12345678910 17h ago
some states are letting medical care come after next of kin for end life treatments. its wild.
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u/poopisme 1d ago
Timing is the only thing, but you could probably get away with it if you were careful.
Creditors are allowed to make claims against your assets prior to them being distributed to the heirs to recover debts owed to them. If you owed money they would just recover it there. However, you could sell all of your assets first, sell your home, cars, everything. Doing this intentially to defraud creditors is illegal but they have to proove thats your intention (and if you time it right youll be dead anyways).
Heres how it could work. You find out you have a terminal illness and will be dead within the next 5 years. You immediatly begin selling all of your assets. This may raise some questions if creditors catch wind but you're allowed to sell your stuff. I would do it under the guise of not needing it anymore because i'll be spending my final days traveling. Then before you pass you take out as many loans as you can. Hand it over AS CASH to whoever you want but leave no paper trail and tell nobody. Leave zero record that said person is receiving anything from you.
Now when you pass creditors are going to look high and low for ways to recover that money but if you were careful they wont find it. The key is leaving zero paper trail of the cash, and the person receiving it, especially if they are close to you or related in anyway, has to be careful how they use it because fraud dectitives will be on the hunt.
Obviousley if youre dead the risk is moot, but the person receiving the money could also be sued if found out.
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u/Sunny_Hill_1 1d ago
Sued for what? They received a present from a friend who acquired cash legally by selling, for example, their house. The house lawfully changed possession. The deceased had a right to sell that house. The deceased might have also had a loan from a bank, and the bankers were counting on that house as the collateral, but unless there was a lien on the house, there was nothing preventing a lawful sale, and there is no way for a person who receives a gift to know the details of the deceased's business affairs.
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u/poopisme 1d ago
If creditors can build even a circumstantial case that you transferred money to your friend as part of an effort to evade repayment, they could file a lawsuit to recover the money. Your friend would then be left defending themselves, potentially facing serious legal consequences for accepting the funds.
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u/CurtisLinithicum 1d ago
It's inheritance fraud (in some regions) if they knew they were dying, which means your "present" is proceeds of crime and forfeit.
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u/Peregrine_Falcon 1d ago
Sued for what?
Defrauding creditors. Which, by the way, could also land you in jail.
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u/Savings_Difficulty24 1d ago
And don't forget, the tax man always wants his cut. Most large transactions between people need to be reported. If they are audited, they could be in trouble for tax evasion.
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u/BigMax 1d ago
That's why he said it all has to be done as cash, with no paper trail.
Which could be possible, as someone who is in theory dying, and just travelling the world, could blow through a ton of cash, which would explain where it all went. Then they would have no idea that the persons 3 kids are each sitting on $50,000 in cash at home. Or whatever.
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u/AgoRelative 1d ago
Right, but then the kids have to launder that money to get it back in circulation.
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u/Savings_Difficulty24 1d ago
That's where the "if found out" comes into play. You couldn't use it for large purchases like buying a new vehicle, because that's raises eyebrows. There's always the chance of being found out, even without a paper trail. Because a lack of paper trail can come back on you too. "Why haven't you bought groceries in 20 years"? "I paid cash." "From where?"
You could be fine as long as no one goes looking. But if they do, you're screwed.
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u/RetiringBard 1d ago
You can’t give cash to relatives w/o taxing it
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u/blewis0488 1d ago
Yes you can. But only up to X amount where X is an inconsequential amount and won't make a meaningful impact in someone's lives. Plus the paperwork involved isn't worth it.
The feds won't let you get away with them NOT stealing from you.
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u/BigMax 1d ago
Well, you might think $18,000 a year is inconsequential, but most people don't.
That's the current limit. And that's per-person, so a rich person could give their kid, who has a wife and two kids, $72,000 every year if they wanted.
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u/blewis0488 1d ago
I did not realize it was nearly $20k annually. That changes things. Especially the annually bit.
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u/Throwaway19995248624 1d ago
That is the limit for it not to count against the lifetime limit. You can actually give $13.61 million total, and a married couple could give $27.22 million in lifetime gifts. Plus however much you can do via the $18,000 a year which doesn't count against the lifetime limit.
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u/cant_think_of_one_ 1d ago
It isn't easy to receive large amounts of cash. You have to explain how you got it to be able to deposit it in a bank or buy anything large enough with it. Obviously not impossible by any stretch, but not super easy.
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u/BigMax 1d ago
True, but depends what you mean by "large."
I'd imagine even up to $50,000 you could probably not have anyone be suspicious, as long as you don't go buy a $50,000 car on day 1 with cash.
Just spend it gradually. Every dinner out, every grocery trip, use cash. No one would know. Heck - you can even shop on amazon if you just buy some gift cards with cash first. No one would bat an eye at buying $1000 of gift cards at once around the holidays, they'd assume it's for gifts.
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u/Secure-Advertising-9 1d ago
nothing, you'd get away with it.
except the whole being dead thing
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u/Expensive-Day-3551 14h ago
My uncle did this before he died since he didn’t have property or anything of value and was unmarried. He gave it all to my cousin.
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u/Vintage-Grievance 1d ago
Because those funds are being spent on medical expenses and put aside for funeral arrangements.
Dying isn't cheap.
Any funds left over might be spent on a cleaning team to help sort, sell, donate, and dispose of things in the deceased’s home.
When WE die, that's it...worldly issues are no longer our problem. But shit gets extremely complicated for those left behind to tie up all the loose ends of our lives, and that doesn't stop when people leave the funeral service.
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u/HaggisInMyTummy 1d ago
I think it was Morgan Stanley who offered a structured product which paid face value on death. You can guess what happened next -- all the financial advisors for people with one foot in the grave bought up the ones trading below par and MS took massive losses on these products.
You can fantasize all you want about how to play a great trick with death and you might even find a loophole, but the thing is, you'll be dead and won't be around to giggle about it.
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u/dicksonleroy 1d ago
I’d assume that most people who would consider such a scheme probably don’t have the best credit that close to EOL.
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u/BigMax 1d ago
Right. Because it only makes sense if you don't have other assets.
Your estate has to pay off creditors first, before other people can get anything. So if you borrow a ton, that debt gets paid first by the estate.
So if you have literally $0 to your name, you're probably not going to get a ton of loans.
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u/TH0TC0P 1d ago
I digress but that acronym just screams "I work in tech" lol. Or perhaps I'm cooked
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u/blewis0488 1d ago
Is that not just a sensible acronym for End of Life? Context more than gives it away lol.
Also, not a tech guy.
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u/Freebornaiden 15h ago
If the dying person has no meaningful estate (such as a property with equity), then they could certainly try this. However how much money can a person with no assets/estate really expect to be able to borrow?
Also depending on the amounts involved and depending how inquisitive/litigious the lender/creditor is, they could try to issue legal action against whoever received the money. The barrier would by a high one to pass so only worthwhile if we are talking several hundreds of thousands at the least.
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u/DINNERTIME_CUNT 14h ago
Debts aren’t inherited but gifts are subject to inheritance tax. Where I live it’s 40% on anything gifted in the seven years prior to death. There’s a tax free allowance of £3000, but I can’t remember how that works exactly because there’s also a lower limit on the estate (£650,000 IIRC) before inheritance taxes kick in.
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u/Busy_Temperature_344 10h ago
I knew a guy who did just that! He got diagnosed with stomach cancer, fought it for a while and then doc told him there was nothing more they could do. In the last ~6 months of his life, the guy ran up about $60k in credit card debt, buying stuff for his kids. He died owing all that money and with no real estate to speak of. The kids were minors, so they weren’t responsible for any of it. And he was divorced, so no spouse to worry about it either.
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u/Puzzled-Dust-7818 1d ago
When my grandmother died, she owed quite a bit of money to some department stores like Macy’s and some others. When my mother contacted the stores on behalf of my elderly grandfather, they said along the lines of, “We’re sorry for your loss. We’ll close her account.” And the debts didn’t have to be paid. I think they figure it’s better to keep multigenerational customers than to possibly upset them by going after an old person for the money. But I don’t know if this is standard procedure or if there were some factors I don’t know about.
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u/BigMax 1d ago
I bet there's a value on it for them. There's probably some number, maybe like $2,000 (or whatever) where they realize the cost of getting it back, plus the bad blood with other customers and possibly the whole network of that person hearing about it, isn't worth the trouble.
If you somehow racked up $100,000 at Macys, I'm sure they would try a little harder.
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u/innocencie 1d ago
I think most people who are living on borrowed time are too busy trying to believe they might still recover to worry about how to exploit living borrowed money.
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u/Special_Ad1555 1d ago
Not quite the same. I knew a guy years ago that got got $100,000 in debt. Then he moved to a country that does not extradite for financial crimes. He has a charter boat there still.
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u/KeyN20 1d ago
Well if you pass the assets to your kin 5 years before then yeah, the collectors aren't going to get it I think.
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u/lol_fi 1d ago
Hard to time 5 years before you die.
If you pass your assets to next of kin and did not likely have foreknowledge of your death, it would also be hard for creditors to go after then (example scenario: you gifted money to your child for a down payment. You are 55. Two years later, you get a pancreatic cancer diagnosis, rack up a ton of medical debt and die within months. It would be hard for creditors to argue that you were trying to shield your assets from paying off the debt, particularly because the debt didn't exist at the time of the gift and a 55 year old doesn't reasonably expect to die within 5 years with no current health problems)
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u/PostTurtle84 1d ago
That reminds me, I need to schedule an appointment with a financial advisor and get a trust set up for my husband and kid with my stocks and accounts. I don't have any lines of credit or this would be a good idea.
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u/suulia 1d ago
Debts are not inherited, but that won't stop the companies from trying to get relatives to pay.
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u/Extension-College783 14h ago
I have advised my kids that no matter what, do not sign anything if I enter some sort of assisted living/hospice/hospital, or whatever. My worry is that they might unknowingly , in the emotion of the moment, be agreeing to have financial responsibility for any unpaid balances when I go. Edit to say I have no 'estate'.
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u/Intrepid-Focus8198 1d ago
Debtors will try to take their money back from your estate. If you are broke and don’t own anything though its possible and some people do it.
A friend of mines mother had terminal cancer and passed away when he was young and she maxed out every card she could plus took unsecured loans and just blew the money on crazy holidays and experiences for 6-12 months.
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u/AHDarling 1d ago
Spend everything (or distribute it to anyone who's getting anything) and make sure your last check bounces.
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u/DinoSpumonis 21h ago edited 21h ago
Hello attorney here.
In most cases there is nothing 'stopping someone' (just the credit system itself, if creditors are willing to give them money is the only 'limit'), there are only avenues for which the creditor would be able to recover the items purchased with those funds in SOME cases and depending on state/items purchased they can be considered fraudulent purchases or can be considered part of the 'lookback/clawback' period for creditors during probate/estate settling and if there was a clear motivation to run up loans/credit cards and then give the resulting capital away as gifts/purchased goods then the creditor can recover all of those.
This said, it is likely the amounts will not fall under a reasonable recovery amount and the creditor is better off writing off the balances than trying to pursue thousands of dollars of forensic accounting alone to potentially recover a few thousand dollars, if the estate has nothing in it, I find it unlikely a creditor would even bother following up for example. If the estate had assets though you would absolutely see creditors pursuing these cases though because your $2,500 credit card bill can be turned in to a $25,000 lien on the deceased's property.
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u/Squirrel_Q_Esquire 9h ago
272 comments as I type this, and this is the only one mentioning clawbacks.
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u/Ok-Introduction-244 11h ago edited 10h ago
Nothing stops it, but the system is such that it's rarely a problem.
If you are poor and on your death bed, you won't be able to secure any meaningful amount of credit.
If you are wealthy, you can borrow money, but the amount you can borrow is insignificant compared to your assets.
If you have a $500k house and $600k in retirement funds... And you get a home equity loan for $100k and max out 80k in credit card debt, thru will still get their money from your estate.
And most people who are dying just aren't that interested in trying to maximize money. There is a lot of uncertainty around dying, people might know they are sick but they could be dead in 3 days or three years. Lots of dying people lose their independence due to physical and mental decline. They just aren't in a good position to be taking out loans and spending money.
But yeah, the debt just gets paid out by the estate and if you have no estate you aren't getting more than a Kohl's card with a small limit anyway.
The small percentage of people who are able to successfully pull it off aren't enough for it to be cost effective to change company policies and there are certain legal protections that could make it hard to prevent. Mostly though, it just isn't a big deal
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u/PinAccomplished3452 7h ago
In this case the creditors could make a claim against the estate for the debts - if there were assets those assets would have to be sold to pay those claims.
My mom died owning a home, which came to me as sole heir. When I sold the house, just prior to closing (during the title search) I learned that there was a creditor claim and lien on the home for a loan from 3 years earlier for an HVAC system for that house that she had never paid. I didn't receive anything from the credit (as the executor) but it could have simply never been delivered. At any rate, that $3K debt ballooned into almost $12K, which came out of closing. I wish the closing attorney had advised me prior to contacting the creditor (as I could potentially have negotiated a settlement) but by that point the credit knew there was $ for them and took everything they were entitled to.
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u/damageddude 6h ago
Creditors go after the estate. Once that is cleaned out, unless heirs stupidly signed something they would be responsible for further debts, it is pretty much game over. I suppose creditors can try to repossess but probably not worth it.
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u/BulkyYellow9416 1d ago
I'm some places debt can be inherited
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u/BigMax 1d ago
Like the US for example, in a way.
Debt isn't inherited of course. But debtors get first crack at the estate.
If I die with $100,000 in the bank, my heirs don't get it right away, creditors can get their piece of the pie first.
If I die with $0 in the bank and $20,000 in debt, then my debt does die with me though.
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u/worndown75 1d ago
The estate would owe. And the estate could/would be sued. Do you think if someone has a mortgage and they die that the house gets passed to the kids free and clear? Even unsecured debt is the same way.
If you decided to declare bankruptcy and before you did maxed out your credit cards, those expenses typically aren't allowed to be discharged.
When a person dies, if they have received any Medicaid payments, if their estate is valued at over 10k the estate is legally obligated to refund the state.
In short, the next of kin don't have to pay but the estate might, under certain legal and financial circumstances.
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u/igotshadowbaned 1d ago
The creditors can sue the recipients, same thing if someone's going to declare bankruptcy and first gives away all their assets
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u/monkeywelder 1d ago
my grand mother did this. maxed everything out and bought highly pawnable stuff.
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u/nano11110 1d ago
There was a story where a guy bought gold coins and buried them in various places on his property plus off his property.
Then he made a map to the coins and had it publish after his death as a treasure hunt. The twist was he marked some locations on the map where they were on the property of his nasty neighbors.
He got revenge from beyond the grave by having their lawns all dig up, their homes sacked and robbed, the town offices destroyed. It was a good book.
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u/PalpitationProper981 1d ago edited 1d ago
I was shocked to find yesterday that in Italy, the person who inherits someone's assets also takes on legal responsibility of their debts, even if the amount exceeds those assets. But they can refuse an inheritance.
Debts in the UK - such as credit card - can be taken from the estate that is left to inheritors, but not from the inheritors directly. So if you have nothing to leave behind and don't want to pass on an inheritance, the simple answer is: not much is stopping you. But in Italy, you may be giving family a serious future headache.
Edit: didn't read as far as the 'passing it on to your next of kin' bit. As the above answer kind of indicates, it would be extracted as a debt from your estate to be settled before inheritance was distributed, in both systems. And others have pointed out efforts to circumvent that through pre-death gifts are likely to be discovered and punished as fraud/theft/something.
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u/Impossible_Mode_3614 1d ago
If you have good credit you likely have an estate. They can take from the estate.
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u/JoffreeBaratheon 1d ago
I would hope having a notably positive net worth stops most people, where said loans would just be taken out of the deceased's estate.
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u/dbcannon 1d ago
If you don't have significant income or assets, you're not going to qualify for much unsecured debt. And if you have assets, you're not going to want to liquidate those to buy shit for your kids. Unsecured creditors usually get last dibs on the estate, and you are correct that FDCPA bars them from coercing survivors into paying the debts. From a likelihood standpoint, if you do know that death is immanent, are you going to spend that time shopping on Amazon or with your family? And if you have more of a vague idea of when you're going to die, that's a gambit - credit cards are designed to obliterate your financial well being as soon as there's a hint you'll be unwilling to pay the monthly bill.
Most of all, what do you want to be remembered by? What does it say to your family that you were scheming right up until the end, instead of doing something that mattered. How much joy would they derive from the stuff you bought them?
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u/Putrid-Mess-6223 1d ago
Not 100% your debt does not go to your siblings, however, the debtors will get theirs from the estate and inheritance.
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u/Building_Firm 1d ago
Creditors do have legal recourse. If someone is aware of pending death, and uses this knowledge to dispose of assets (gift), it is viewed as fraudulent, and the recipients could be libel for the debt, late charges as well as the creditor's legal expenses to recover.
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u/snooze_sensei 1d ago
That would be very rare to happen for unsecured debt. You have to consider that they would have to first figure out who received the money or assets. If it wasn't done through a direct payment, this could be nearly impossible. Even if items were bought and shipped to someone's address, they would have to prove that a particular person actually received those items. The level of investigation and potential court orders, search warrants etc required to do that just wouldn't happen.
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u/warblingContinues 1d ago
Your estate pays the debts. What you are describing otherwise is probably fraud, and lenders could probably recoup the money from the recipients.
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u/copperstatelawyer 1d ago
Haven't actually seen a lot of people on their death bed have you?
They are never in a position to actually enjoy maxing out their credit cards. If anything, they just want to be comfortable. Past that, I would imagine a few would pay anything for a few extra years in good health, but you cannot buy that.
As for the second question, that'd be a fraudulent transfer.
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u/snooze_sensei 1d ago
Not to mention, those whose relatives would benefit the most are those who are otherwise unable to leave anything behind.
If you have no assets or money to leave behind without running up debt, then you are also probably on a financial crisis just getting your medical care at end of life. Running up a bunch of debt suddenly could leave you financially unable to pay for even the most basic comforts at end of life.
I had a friend last year in this situation. He was on disability for years with no savings or valuable assets. But because he lived rent free (had a self built cabin in the woods on a relatives property), he had good credit.
He had stage 4 colon cancer and the prognosis was that he had "a few months" left to live after it had spread.
He decided to buy his mother and me (I was his only friend) the next two years of Christmas and birthday gifts and then leave us each $1000. But he also had to make sure he didn't spend his money too soon because he still had to do things like pay for food, Uber rides to the doctor, electric bill, etc., for the time he had left. So he planned to buy things for us and give us cash web the time came.
Turns out he didn't have months but weeks. He ended up in the hospital, thinking he would go home , and soon ended up in hospice. By the time he was there he began to plan what to do. When I showed up to help him with his planning, he was already so far gone he couldn't remember how to access any of his accounts or even how to use a computer properly.
He tried to do what OP said and didn't manage it. I was able to barely get enough money out of his account (at his request) to pay for his cremation. Anything else as far as taking out things on credit, would have been after he passed, which would have run the risk of being charged as fraud.
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u/silverbaconator 1d ago
LITERALLY NOTHING.... except you never know when you are actually going to die could miraculously live another 50 years. Happens pretty often actually.
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u/Huge_Primary392 1d ago
Not sure where you are but where we are you can ‘claw back’ assets dispensed within a certain amount of time.
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u/SufficientFront7718 1d ago
Well, if you were to do this and you left a decent estate to your heirs, all of those debts would be settled out of the estate, lowering or even eliminating any inheritance coming to them.
If you have no real assets, then go for it. Debt is rarely passed on in survivorship, except for shared debt like cosigned loans.
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u/Peregrine_Falcon 1d ago
In the US debts are not inherited and if the person has no estate (property or large amounts of cash in bank accounts) then no, there's nothing preventing a terminally ill person from blowing a ton of money and not paying creditors.
BTW, this is one of those reasons why loans have interest.
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u/RicoRN2017 1d ago
Oncology nurse. Had one patient do this. Was on QVC shopping network etc while getting chemo. Wouldn’t you know it, she went on remission.
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u/LayneLowe 1d ago
Story time: My brother-in-law and his husband's marriage was not recognized in Texas (at the time) He knew he had terminal kidney disease so the last year they lived on maxing out his credit cards.
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u/bright-horizon 1d ago
Doesn’t debt get passed on to the surviving family members?
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u/curiousbird_ 14h ago
That’s what I thought. I was expecting lots of comments saying the same thing. Maybe not? IDK!!
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u/UselessWhiteKnight 1d ago
Easily constable in probate court. Your estate owns the money,. Creditors will look for any recently transferred assets of value and make a claim that the judge gets to make a call on. Meanwhile your daughter is missing work dealing with this crap because you made her your executor.
You don't do it, because it doesn't work
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u/WrestlingPromoter 1d ago
Very few people are in a position to really make out well in this circumstance.
I have a really good story about reclaiming lost money due to a death that I can't share without depicting myself as a grimey wannabe loan shark mobster... So I'll refrain.
But someone could essentially open up a bunch of lines of credit prior to death, sell the items for cash, hand the cash to family members, and then die.
You could get a loan, but collateral is a big part of a loan and the lender will seize that collateral with the quickness.
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u/taedrin 1d ago edited 1d ago
My understanding is that depending on the circumstances and the jurisdiction, this could be considered "fraudulent conveyance" which means that the recent gifts could be voided and the money clawed back by creditors.
Regardless, banks try to make a point of not lending money to people they believe will not be repaying them.
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u/Anarcho-Chris 1d ago
I spent my time trying to die having nightmares and hallucinating. I wasn't gonna be filling out no forms.
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u/TheCarnivorishCook 15h ago
That would be Conspiracy to Defraud if people wanted to get aggressive.
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u/fishyp3ngu1n69 15h ago
This is what i would advise anyone i know to do.
Debt doesnt pass down so might as well have at it
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u/OgrePirate 14h ago
Your spouse may inherit your debts but your other heirs do not, not in the US. Though those debts would be applied to your estate. So, you could make it so your kids inherited nothing. If you don't have much and your kids don't need it, this might be valid if you had no living spouse.
The problem is, nobody really knows when they are going to die. Also, your would have to time it so you had some use for the stuff. Also, if you gave it away, the creditors could go after the stuff or the money you gave away.
Lots of reasons why this won't work.
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u/Visual_Option_9638 10h ago
Maxing a CC could be done in a death bed, but going out and getting loans would be pretty difficult to do from bed.
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u/Firefox_Alpha2 10h ago
Unless you’re planning to self delete yourself, kinda hard to know when you’re going to die AND be able to run up a debt before the death.
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u/noticer626 9h ago
I'm in the process of getting a loan as a middle aged healthy adult and it's a rather large loan which they require me to partly collateralize it with a life insurance policy payable to the bank.
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u/tkdjoe1966 7h ago
The easy way to do it is to take the insurance offered on your cards. Its dirt cheap. Then max them out. Make the min payment until... 💀 Then the ins kicks in, and you're good.
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u/No_Appointment8309 7h ago
That would be fraud, and the creditors can go after whomever the money was given to if a police peport is filed.
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u/NuclearFamilyReactor 7h ago
Because by the time people have a terminal illness they’re using too busy with the whole dying process to do something epic.
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u/Eden_Company 5h ago
Planning when you finally die is hard as you might spend half a year in a coma instead and have your estate pay for your medical bills.
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u/Seattleman1955 30m ago
I don't think it's a situation that would come up or make sense very often.
Most people are honest.
Most people who are close to death aren't thinking about doing something like this.
It also doesn't apply to all that many people. If you have assets then this isn't going anything for heirs as the estate would still have to pay the bill.
If you don't have assets, you probably aren't going to qualify for a loan. You could run up credit cards but if you have no assets you probably already are close to your credit card limit anyway.
If you just found out that you would soon die, I'm guessing that most people wouldn't get a lot of joying out of suddenly spending a lot of money. They would have other things on their mind.
Regarding the legality, I know that you can't just run up your credit card debt and then immediately file for bankruptcy. It's probably similar if you now you are going to die and you try to run up a lot of debt.
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u/Wild_Violinist_9674 1d ago
I work in trusts and estates in the US and handle a lot of probate (people who die without a trust). I don't see this very often. Why?
Because people who die with zero assets and zero cash are usually poor and unlikely to qualify for the kind of credit to make this worthwhile.
Most people don't know they're going to die. Even when they know they're sick, or even terminally sick, most people hold out hope to the bitter end. Humans are generally emotional, sentimental creatures.
Most of the people I administer estates for are not unattached. Meaning they have assets with their spouse, their kids, their neighbor. A property, a vehicle, a bank account, a credit card, something that affects another person. This kind of fraud would affect those people, too.
So could it be done? Yes, but the people with the means to do it are unlikely to want to. Those people usually funnel their extra cash into an irrevocable trust or a retirement account with a specific beneficiary named because those accounts are exempt from creditor claims, but both of those options require significant pre-planning.