Understanding debt when a person dies

What happens when a person dies leaving debts unpaid? Find out what you might need to do in our guide.



There are many kinds of debts and it would take a whole other article to explain them all.

However, the most important things to know are:

Most debts are paid from the value of the person's estate. This means you, as executor, have to arrange to pay these debts – but you shouldn't have to pay from your own pocket.

There are exceptions to this rule. One of the most common exceptions is shared debt.

How shared debts work

If your partner or other relative has died, it's important to find out whether you shared any of the debts with them. If you took out a loan together, had a joint mortgage or had a joint bank account, any debt will fall to you.

You should ask creditors to take your partner's name off future bills. If you're struggling to pay, see if you can pay in lower amounts over a longer period.

Telling creditors

Creditors are people who are owed money. An executor needs to tell creditors that the person in debt has died.

First, you should try to contact all the lenders. Secondly, you should place a notice on The Gazette website. Finally, you should put a notice in the newspaper local to where the person lived or worked.

These are three ways of telling creditors not to make a claim against the estate.

What if there's insurance?

If the person who died had insurance, it can sometimes be used to pay off debts. However, this depends on the type of insurance and the terms of the policy.

You need to check the terms of the insurance policy before making any assumptions. Some insurance is paid out for illness but not death, for example.

If the insurance policy does cover death, you can contact the company and make a claim. This money can then be used to pay off the debts.

Without insurance, the executor has to pay off the debts from the estate.

Paying off debts in priority order

Sometimes, a person dies and doesn't leave enough money to pay off their debts. In this situation, the debts should be paid off in priority order.

First to be paid off are secured debts such as mortgage repayments. These are debts secured with a possession like a car or piece of valuable jewellery.

Next comes priority debts such as income tax and council tax. Once these are paid, the executor moves on to unsecured debts such as utility bills and credit cards.

If there's enough money in the estate to cover all the debts, you can pay them off in any order.

Sometimes, an asset like a car or a house can be sold to help pay off debts. This is an option you'll have to consider if the estate doesn't cover all the debts that need to be paid off.

I'm struggling to pay joint debts after the death of my partner. What do I do?

If you're struggling to pay joint debts after the death of your partner, you're not alone. Know that many other people have been in your situation and come out the other side.

Unfortunately, we're not in a position to offer financial advice. So, your best bet is to get a debt advisor who will give you financial advice without judgment.

Are families responsible for debt after death?

No. Debt isn't passed on to surviving family members in the UK. Family members and friends are never responsible for paying off the debts of someone who has died unless they shared the debt in the first place.

Do credit card debts die with you?

You might have heard that credit card debts are written off after you die. This is a myth. Like any other debt, they must be paid off out of your estate and only get written off if the estate runs out of money.

We hope this article has helped you understand debt when a person dies. Treasured Moments creates beautiful digital memorials that help make memories brighter. For more help and advice, follow our blog.