How Much Debt is Normal? After Death, Americans Are Leaving Their Families Massive Amounts Of Debt

Cristina Silva
How Much Debt is Normal? After Death, Americans Are Leaving Their Families Massive Amounts Of Debt

As they go to their graves, Americans are leaving their families a legacy of debt. More than 70 percent of consumers have some debt at the time of their death, according to data from credit bureau Experian released this week. 

And it's not just a little bit of debt. It's a lot. The average total balance is $61,554. With home loans taken out of the equation, the average debt was still $12,875.

Of those who had debt when they died, about 70 percent still carried credit card balances. Consumers also had loans for cars, college tuition and other expenses. The average student loan debt still outstanding, for example, was $25,391.

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The debt isn't forgiven when someone dies. In some cases, their relatives get the bill. 

“Debt belongs to the deceased person or that person’s estate,” Darra L. Rayndon, an estate planning attorney with Clark Hill in Scottsdale, Arizona, told Market Watch

Meanwhile, those relatives are likely to have their own debt which they were already trying to pay off. The average American household owes $16,000 in credit card balances, or $747 billion for all U.S. consumers. The average balance on personal loans is about $7,729, while mortgage debt stands at about $194,875, Bloomberg reported in December.

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To avoid burdening a spouse or children, financial advisers recommend paying debts off one by one, starting with the smallest balance. 

"Mathematically, it makes sense to pay on the debt with the highest interest rate first. After all, doesn't that save you the most money?" Dave Ramsey, bestselling author of "The Total Money Makeover," writes on his website. "Maybe, but it's more important to pay your debts in a way that keeps you motivated to keep going until you've wiped them all out. If you begin with the biggest one, you might think you're not making fast enough progress, lose steam, and not finish the job."

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