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Death and Debts

Death and Debts

Bearers with coffin

Dying with debt isn’t something anyone wants. However, it’s becoming a very common experience. The good news is that when we die our debts don’t follow us. With more than 1 in 5 Americans now reporting they owe debts they won’t be able to pay off in this lifetime, that can provide a little bit of solace to a solemn experience.

However, while your debts won’t follow you into the grave, they may follow your heirs. For this reason, it is important to take steps now with your probate attorney to ensure that your heirs won’t be held responsible for the debts you may have accrued.

Dying with Assets

When an individual dies and possesses assets such as a 401(k), property, car collection, etc., these assets are considered an individual’s estate even if they do not have them listed within a will. If an individual owes debts, and the creditors request payment, the executor of the will must sell these assets to pay off the deceased’s death. These debts must be paid before an individual’s heirs can inherit the assets of the estate.

Credit Card Debts

Unless you are a co-signor on a credit card, you are not responsible for an individual’s credit card debts. In many cases, credit card companies will discharge credit card debt after an individual has passed away. However, they can file a claim against the estate if they believe there are sufficient assets to cover the debt they are owed.


The individual’s named on the mortgage are directly responsible for the debt. This may include either spouses or children. Even if your heirs are not named on the mortgage, they will need to take over the payments. Failing to do so can lead to foreclosure. This includes any HELOC’s or second-mortgages that have been taken out.

Automobile Loans

As with mortgages, any car payments must be paid by your heirs. After your death, they will need to contact the bank to assume the payments. These will need to be paid until the loan is satisfied, or until the heirs are able to sell the vehicle.

Student Loans

Most student loans are forgiven upon death. The government cannot lay claim to an individual’s heirs for Federal Perkins Loans, or Stafford Loans. Again, the exception to this is if an individual has co-signed on these loans. Additionally, creditors may be able to seek payment for private student loans.

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