Surprise, you're dead. Distinct from 'zombie debt' which should be dead, but refuses to die, your debt does not automatically die when you do. Your family or heirs could be forced to pay the bills that you didn't (or couldn't) pay before you moved on to another plane of existence. You might want to read Part One of this series.
So the widow said to me, "Don't you just write a letter to the credit card companies and make them stop sending bills?" It's not always that easy. If you have a debt that is only in your name and you die without any assets, then maybe those debts would die too. But that is a loaded statement. Let's break it down.
You need your bankruptcy papers are a shield against future collection actions for discharged debt. The answer is asimple phrase: "zombie debt". Zombie debt is the phenomenon of old and discharged debt being revived by debt buyers and debt collectors long after the debt has been rendered uncollectible. Check out Zombie Debt Haunts the Discharged and Zombie Debt.
Another reason: refinances or purchases of real estate.
The secret to settling debt with your creditors is assure finality. You want to make sure that the debt never comes back. (Read: Zombie Debt Haunts the Discharged and Zombie Debt.) Can debt be settled? Absolutely. However when you negotiate to settle your debt you must make sure that the creditor reports it properly on your credit report.
Will settled debt hurt your credit score?