Debt After Death

Debt After Death
Debt After Death

As you enter your retirement you might start to think that you no longer need to think so much about your debt. You might have agreed a repayment plan over the next twenty years, so if you’re currently 90 then this might not seem that much of a real threat. Does it make sense then to organize your debt repayments so that you are paying back over the longest period of time? Is there any reason to hurry to pay off your mortgage or to make sure you have no credit card debt? Here we will look at what will happen to debt after death.

When you’ve passed on it’s customary to leave your loved ones some bounty in your will, and this can be a great help for your friends and family. However it is in some cases possible to miss out on inheriting money and to instead inherit debt – in some cases debt after death does go on.

The good news is that your children will not normally inherit debt after death unless they were a party to it when you took out the loan, though it can still occur. One reason this might happen is if you have a co-signer. If you took out a loan that had a co-signer, or if it was an entirely joint account, then the debt after death will now fall to them. The same may well be the case for those loans that have a guarantor so you need to read the precise terms and conditions.

Meanwhile if you have taken out a secured loan which has lower rates, then this will mean that your ‘guarantor’ is essentially your property and that will mean that the profit from your home goes to paying off the debt either partially or in full. This won’t then effect your family, but what it will mean is that your estate will no longer be passed to them and they won’t benefit from the money you have saved – most of us of course would want our family to prosper from our life’s work.

So what can you do to protect your family and friends from debt after death? The first thing to do is to prioritize debt that effects others – focus on paying back loans that you took out with co-signers and maybe even try and use debt consolidation. Likewise you should pay back any secured loans as soon as possible.

The very best way to prevent debt after death though is to take out life insurance which will not only protect your family from your debt but also make sure they are provided for. At the same time you should of course take the time to prepare your will as soon as you have a family to care for.


10 thoughts on “Debt After Death”

  1. I feel that debt should not be passed on to others. They should not have to deal with it once you pass on. So get your debts paid off so they do not have to deal with it. Why put this trouble on your loved ones?

  2. It’s sad that many people do not think about debt after death. This leads to their children paying that money. So it is definitely not a good thing not thinking about debt after death.

    PS: I’m glad I came across this blog. I can find many interesting and useful things.

  3. I am terrified by debt after death. I cannot see me provoking such thing. Under no circumstances I will accept my children to pay for the mistakes I made. Cuz debts are usually mistakes. So no, sir, no debt after death for me.

  4. My friends dad died last year. He left him a mountain of debt. A few credit cards with $1000 on one and $3600 on the other. Plus he has about 4 grand left on his house to pay off. So it is not worth it to leave your family with your debt. And not really wise.

  5. My parents died and left me with no debt. I could not have afforded it if they did. I would have had to sell a lot. Think about it if you have a large amount of debt. You do not want others to have to repay this for you.

  6. This post about debt after death is creepy. Sincerely, I’m afraid of death. I’m afraid because I don’t know what will happen. I’m afraid of unknown.
    Sincerely, I don’t even want to think or talk about debt after death.

  7. I would hate to face debt after death. I would not stand the fact that my children have to pay for my mistakes. It is such a bad thing people seem like not paying too much attention to the debt after death. Which makes their kids sad, haha.

  8. The reason why some people do not think about debt after death is because of their business. After retiring, some go into business. If not by themselves, maybe they finance others (sons, nephews etc). After starting on this road, you never come back. This is wicked.

  9. I do not want anyone to pay for my past either. I would think it to be terrible to rack up a bunch of debt to have someone else pay for it. I could not do that. But some people just do not care.

  10. My uncle left my aunt loads of debt when he died. She had to sell everything she had to pay for it all. She had to do it though as she was the next responsible. It was pretty sad.

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