What Happens to Debt When You Die

It’s not a topic anyone wants to think about, but it’s one that affects families every day: what happens to your debt when you die? The short answer is that most debts don’t simply disappear. But the longer answer, the one that actually matters, is more nuanced and often more reassuring than people expect.

Here’s what you need to know, clearly and factually.

The General Rule: Debt Belongs to the Estate

When someone dies, their debts become the responsibility of their estate, not their family members personally. The estate is the legal term for everything the deceased person owned: bank accounts, investments, property, vehicles, and other assets.

During the probate process, the estate’s executor (the person named in the will, or appointed by the court) is responsible for:

1. Identifying and notifying creditors
2. Paying valid debts using estate assets
3. Distributing whatever remains to heirs

If the estate has enough assets to cover all debts, the debts get paid and the remaining assets go to heirs. If the estate doesn’t have enough assets to cover all debts, the estate is considered insolvent, and creditors get paid in a priority order set by state law. Heirs don’t receive anything from the estate, but they also don’t inherit the debt.

The key principle: In most cases, your family members are not personally liable for your debts after you die.

The Exceptions: When Family Members Might Owe

There are specific situations where someone other than the deceased may be legally responsible for the debt.

Co-signers and joint account holders

If someone co-signed a loan with you or holds a joint credit card account, they’re equally responsible for the full balance. This doesn’t change when one person dies. The surviving co-signer or joint account holder owes the remaining debt in full.

This is different from being an authorized user on a credit card. Authorized users are generally not responsible for the balance after the primary cardholder dies (though some issuers may try to collect anyway, and the rules can vary by state).

Community property states

In the nine community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin), debts incurred during a marriage may be considered community debts. In these states, a surviving spouse may be responsible for the deceased spouse’s debts, even if they weren’t a co-signer.

The specifics vary by state and by the type of debt. If you live in a community property state, consulting with an estate attorney is especially important.

Filial responsibility laws

A handful of states have old “filial responsibility” laws that could theoretically require adult children to pay for a deceased parent’s care-related debts (particularly nursing home costs). These laws are rarely enforced, but they exist in roughly 30 states. In practice, they’ve been used primarily in cases involving Medicaid recovery, where the state seeks to recoup costs of long-term care.

State-specific laws

Some states have laws that create liability for specific types of debt, such as medical bills for a spouse. These vary widely and can be complex. When in doubt, consult a local estate or probate attorney.

How Different Types of Debt Are Handled

Credit card debt

Credit card debt is unsecured, meaning there’s no collateral backing it. If the deceased was the sole cardholder (no co-signers, no joint account), the debt is paid from the estate. If the estate can’t cover it, the credit card company absorbs the loss. Family members are not liable.

What to do: Notify the credit card company of the death and request that the account be frozen to prevent additional charges (including automatic payments and subscriptions).

Mortgage

A mortgage is secured by the home. When the homeowner dies, the mortgage doesn’t disappear, but federal law (the Garn-St. Germain Act) allows heirs who inherit the property to assume the mortgage without triggering a due-on-sale clause. This means you can keep making payments and keep the home.

If no one wants or can afford the home, the estate can sell it to pay off the mortgage. If the home is worth less than the mortgage balance, the estate may be able to negotiate with the lender or pursue a short sale.

Auto loans

Like mortgages, auto loans are secured by the vehicle. The lender has a lien on the car. Heirs can either continue making payments (the lender typically must allow this), pay off the loan, or surrender the vehicle. If the car is surrendered and sold for less than the balance, the remaining amount becomes an unsecured claim against the estate.

Student loans

Federal student loans are discharged (forgiven) upon the borrower’s death. The loan servicer requires a copy of the death certificate, after which the balance is eliminated. Under current tax law, this discharge is not treated as taxable income.

Private student loans depend on the lender’s terms. Some private lenders also discharge loans upon death, while others may seek repayment from the estate or co-signers. If you co-signed a private student loan, your obligation typically survives the borrower’s death.

Parent PLUS loans are discharged upon the death of either the parent borrower or the student for whom the loan was taken.

Medical debt

Medical debt is generally unsecured and paid from the estate. In community property states, a surviving spouse may be liable. Many states also have “doctrine of necessaries” laws that can make a spouse responsible for medical expenses. Beyond that, medical providers can file a claim against the estate but typically cannot pursue family members directly.

Tax debt

Federal and state tax debts receive high priority in estate proceedings and are among the first debts paid. Tax liens can attach to estate property. Surviving spouses who filed joint returns may be liable for taxes owed from joint filing years, though “innocent spouse” relief may apply in some cases.

What Collectors Can and Can’t Do

After someone dies, debt collectors will sometimes contact family members. This is often the most stressful part of the process, especially during an already difficult time. Here’s what you should know:

Collectors CAN:

• Contact the executor or administrator of the estate
• Contact the surviving spouse, parent (if the deceased was a minor), or guardian
• Contact any other person authorized to pay debts from the estate
• File a claim against the estate during probate

Collectors CANNOT:

• Imply that family members are personally responsible for debts they didn’t co-sign
• Use deceptive practices or misrepresent the amount owed
• Harass, threaten, or intimidate anyone
• Contact people solely to locate the executor (this is allowed, but they can’t discuss the debt details with people who aren’t authorized)

If a collector contacts you about a deceased person’s debt and you’re not the executor, co-signer, or surviving spouse in a community property state, you can tell them you’re not responsible and request that they stop contacting you. They’re legally required to honor that request.

How to Protect Your Family

While you can’t prevent debt from existing at the time of death, you can take steps to minimize the impact on your loved ones.

Have a will and estate plan

Without a will, the probate process is more complicated, more expensive, and more stressful for your family. Even a basic will helps.

Avoid unnecessary co-signing

If you can qualify for a loan on your own, do so. Every co-signed debt is a potential obligation for someone else if something happens to you.

Keep beneficiary designations current

Assets with named beneficiaries (life insurance, retirement accounts, payable-on-death bank accounts) pass directly to the beneficiary and bypass the estate entirely. This means creditors generally can’t touch them. Make sure your beneficiary designations are up to date.

Consider life insurance

If you have significant debts and dependents, a term life insurance policy can provide funds to cover debts and living expenses without your family having to rely on estate assets.

Communicate with your family

Your executor should know what debts you have, where your accounts are, and how to contact your creditors. A simple document listing your debts, account numbers, and creditor contact information can save your family enormous stress.

Frequently Asked Questions

Can I inherit my parent’s credit card debt?

Generally no, unless you were a co-signer or joint account holder. Being an authorized user typically does not make you liable. If a collector tells you otherwise, ask for written proof of your legal obligation. Many collectors will try to get family members to voluntarily pay debts they don’t actually owe.

Should I keep paying my deceased spouse’s debts?

For secured debts (mortgage, auto loan) that you want to keep the collateral for, yes, keep making payments. For unsecured debts where you’re not a co-signer, don’t pay anything until you’ve consulted with a probate attorney or understood your state’s laws. Making voluntary payments on a debt you don’t owe can sometimes complicate things.

Does the deceased person’s credit score matter?

No. Credit scores exist only for living people and cannot be inherited or transferred. The deceased person’s credit accounts will eventually be reported as “deceased” by the credit bureaus. If you’re a surviving spouse, your own credit score should not be affected by your spouse’s debts, unless you were jointly liable.

What if the estate doesn’t have enough money to pay all debts?

When an estate is insolvent, debts are paid in order of priority (typically: secured debts, funeral expenses, taxes, then unsecured debts). Once the estate’s assets are exhausted, remaining debts are discharged. Creditors absorb the loss.

Can debt collectors take my inheritance?

No one can take assets that were properly left to you through beneficiary designations (like life insurance or retirement accounts). However, if you were expecting an inheritance from the estate itself, debts must be paid from estate assets before distributions to heirs. So while collectors aren’t “taking” your inheritance, there may be less left after debts are paid.