When Inherited Property Leaves You Drowning in Debt
Coping with the death of a loved one is tough enough, but it becomes even tougher when the inherited property leaves the surviving beneficiary drowning in debt. On top of worrying about the property debt, the beneficiary also has to struggle with taxes and maintenance. The following three practical tips can help the beneficiary get back on track regardless of how overwhelming his or her debt might appear.
Assessing the Debt
Knowing the exact amount owed and what has been repaid (or not) every month is the first step towards getting the debt under control. No matter how unpleasant it might be, putting everything in order will save the beneficiary a significant amount of time should he or she opt to seek tax debt help. A financial advisor or agency will require all the information to advise the beneficiary on what to do and common pitfalls to avoid.
The beneficiary needs to know:
- The number of debts he or she owes and the names of the creditors
- The outstanding balance on each debt
- The interest rate amount on each debt
- The payment he or she is making on each debt per month
Consolidating the Debt
A beneficiary with multiple sources of debt may be able to save a significant amount of money by consolidating. Debt consolidation entails combining various debts into a single monthly payment. This strategy can help the beneficiary simplify his or her repayment schedule, reduce the monthly payment amount, and lower the monthly interest amount. Debt consolidation, however, isn’t that simple. Working with a debt advisor is highly recommended.
The right debt advisor will help the beneficiary assess his or her finances and determine what he or she can comfortably repay. The advisor will also help the beneficiary decide whether to roll the debts into a secure or unsecured loan or to just leave them as they are and focus on repaying them.
Making Significant Lifestyle Changes
Another way someone drowning in debts because of inherited property can turn around his or her situation is by making major lifestyle changes. USA Today reports that housing is one of the largest expenses for U.S. families. Moving to reasonably priced houses in affordable neighborhoods and opting for affordable means of transport can help free some money that can go towards repaying the debt.