Do I Have to Pay Off My Dead Loved One’s Debts?

Having a loved one die is always hard. But it can be even more difficult to deal with when you are reminded of their absence every time you go to the mailbox. And it can be sort of scary if the mail you are getting consists mostly of bills.

If you are struggling to know what to do with the debt a loved one has left behind, you are not alone. According to recent data from the credit reporting company Experian, the average American dies over $61,000 in debt.

“Among the 73% of consumers who had debt when they died, about 68% had credit card balances. The next most common kind of debt was mortgage debt (37%), followed by auto loans (25%), personal loans (12%) and student loans (6%).”

What happens to these types of debt when the debtor dies depends on the type of debt, the size of the deceased person’s estate, and whether anyone co-signed the contract or loan.

Credit Card Debt

Most credit card debt is paid off when an estate is probated, which means processed by the court. If there are not enough assets in the estate to pay off the credit card debt, the credit card companies are simply out of luck because the family members of someone who dies with a lot of credit card debt will not typically be forced to pay off those debts unless the account was a joint account.

Mortgage Debt

Mortgages are one type of debt that does not go away when the debtor dies. In the worst case scenario, a family may have to sell its home to pay off debts after a loved one has died. More often, the mortgage is taken over by a surviving family member.

Auto Loans

Co-signers or other family members can take over the payments on an auto loan and keep the car, or stop paying and allow the lender to repossess the car.

Student Loans

What happens to student loans varies based on the type of lender and whether or not there was a co-signer for the loan.

If the loan is a federal loan, the loan will be forgiven if the debtor dies. If the loan is a private loan, whether it will be forgiven depends on the terms of the loan contract.

If someone co-signed for the loan, they will be responsible for paying it off, no matter who the lender is.

Medical Bills

Although it is not listed above, medical debt is another type of debt that people often die with. Medical debt often has to be paid by the estate of the person who died or by surviving family members if they can afford to pay.

You Are Not Alone

Figuring out which debts go away, which are paid by the estate, and what ones you have to take responsibility for can be a daunting task. Don’t hesitate to reach out to our office if you are looking for help dealing with a loved one’s debts.

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