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3 min read

What Happens to Debt When You Die?

The last thing you probably want to think about is what happens to debt when you die. Generally speaking though, in this situation, any unpaid sums will usually be deducted from your estate.

What happens to debt when you die?

Still, what happens may depend on the type of debt.

What happens to debt when you die?

To quote a spokesperson from the Money Advice Service:

Technically speaking, if you pass away, it is the responsibility of your estate to pay any debts. If you have no estate, or the estate isn’t sufficient to cover all liabilities, they get written off and creditors cannot chase surviving family members, no matter how big the debt. However, there are some exceptions.”

The executor of the will, or the administrator, is responsible for making sure as much of the deceased’s outstanding debts are paid as possible. As mentioned above, in many cases this will come out of the estate’s value.

Joint debts and guarantors

Exceptions Exceptions can arise in the form of joint debts and guarantors.

In the case of death, any outstanding sums will pass to the other person detailed on the application. For example, if the deceased took out a mortgage with another individual, the surviving person would now be responsible for making these payments.

It’s a similar system for guarantors. If someone was named as a guarantor on an account of the deceased, that individual should now have to pay off those debts.

Does debt die with you?

Assuming the value of the estate does not cover your debts, then anything remaining over should be written off upon your death. However, your creditors will still be paid as much as possible. This means any larger debts could influence how much money your loved ones receive through inheritance.

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