What Happens to Your Debt When You Die?

For most people, debt is a part of life, as we all live in a world where money controls what we do, where we live and also how we live. No two lives are the same, and no two people have the same debts, but in the end, our debt is managed in similar ways when we pass away.

The reality of your debt responsibilities can have you questioning what happens to your debt when you die. Regardless of whether you have good credit, very little debt or are blacklisted and over- indebted, your debt should not affect others when you die. It is not legal for your family to be hounded by debt collectors for payments when you pass away, and this includes anything from store cards and credit cards to home loans, car loans and medical bills you were paying off.

If you die and still have debt in your name, this debt will be settled by your estate before anything can be passed on to the beneficiaries mentioned in your will. You can relax knowing that your debt will not affect your loved ones when you pass away, unless they co-signed for any debt with you. It is normal for parents to worry about how their debt could affect their children, but there is no legal reason your children will be obligated to pay your debt. If there is debt remaining in your name that cannot be settled, it will be written off.

You should note that any debt you’re still repaying when you pass away will get in the way of what you’re loved ones stand to inherit from you. The executor in charge your handling your estate when you pass will prioritise debt before anything else. Try to stay on top of your finances and debts, and avoid becoming over-indebted and leaving your dependants with nothing. At Debtco Group, we specialize in highly-personalized and effective Debt Counselling services, and can help you overcome your debt and organize your finances.

If you’re still paying off a home loan when you die, your children have the opportunity to step in and continue paying the mortgage so that they can keep the home. They can also choose to sell the property, or might need to sell if they can’t afford the repayments. While we all want to pay off our biggest assets before we die, it is not always within our financial means to do so. Doing your best to stay clear of unnecessary debts can help you to leave your loved ones something when you pass.

If you’re having a hard time getting your debts repaid, Debt Counselling might be a viable solution. Contact Debtco Group today for sound solutions to your debt problems.