I am currently a Washington state resident but my wife is still an Oregon resident. Recently she has had some health issues and has been given a short amount of time left to live. We are trying to figure out what will happen to her student loan and credit card debt when she passes away.

I know Washington is a community property state, but Oregon is not. Which state's laws do we fall under?

  • We do not own a home or any property.

  • Her credit card debt and student loans are in her name only.

  • We have no children/dependents.

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    This question appears to be off-topic because it is asking for a specific legal advice. You'll need to talk to a lawyer familiar with the Oregon and Washington State laws, and check the specifics of the loan terms. At the least, her estate will be liable, but you may be as well. – littleadv May 28 '14 at 23:45
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    I disagree. In my opinion, debt is on-topic, as are the rules (laws) regarding inheritance. I don't know the answer to the OP's question, but it strikes me as both on topic and a decent question. – JoeTaxpayer May 29 '14 at 10:01
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    @littleadv I can see your point, and we do have plans to meet with a lawyer. My goal in posting here is to try and become a little more familiar with the process and maybe even discover more questions I should be asking when we do meet with the lawyer. By no means are we considering advice given here as a replacement for professional legal advice, but were hoping to learn something from some people who have had similar experiences. If there are any edits/additions you think should be made to my post in order to make it more suitable, let me know and I'll do my best to incorporate them. – Dryden Long May 29 '14 at 16:38

Federal Student Loans

Federal Student Loans are discharged with the borrower's death, regardless of who co-signed the loan.

PLUS Loans (and Parent PLUS Loans)

PLUS loans are discharged on the death of the borrower. In the case of Parent PLUS Loans, if the parent(s) out-live the student, the loan can be discharged through the Death Discharge application. (Parent(s) may be subject to Cancellation of Debt Income (CODI) tax liability. Consult your local tax professional)

Private Student Loans / Credit Cards

Private loans and credit cards are not required to discharge debts upon the death of a borrower. Depending on the lender, they may attempt to collect against your wife's estate (community property) and you may need to seek out an estate lawyer for more specifics. My research shows that banks will often evaluate each on a case-by-case basis, depending on the amount of the debt and the assets.

I can't find any references about spouses living in separate states, at least for property law, and each state has wildly different laws. So depending on the amount of private loan and/or credit card debt, you may owe that (and want to pay it to avoid legal fees), but if the amount is quite high, you should consult an estate lawyer.

  • Thanks, her loans are Federal, so that information helped a lot. – Dryden Long May 29 '14 at 16:33
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    The OP raised the question of community property - isn't there some risk that this will apply in his case leaving him also directly liable for the credit card debts? – Ganesh Sittampalam May 29 '14 at 21:46
  • @GaneshSittampalam Because of the varying property laws between states and the unique situation of the two spouses living in separate states, where one is a community property state and the other is not, this very specific case depends entirely on how aggressively the credit card companies decide to pursue the collection (usually depends on the amount). As I mentioned, contacting an estate lawyer would be the best course of action for this very specific situation. – Noah May 29 '14 at 22:06
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    Makes sense - might be helpful to edit the answer to make clear that it does consider that aspect of the scenario. I also found it a bit hard to understand "Private loans are not required to discharge debts upon the death of a borrower". – Ganesh Sittampalam May 29 '14 at 22:10
  • Edited to be more clear, and to directly address the community property / split residency issues that OP noted – Noah May 30 '14 at 13:58

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