What Happens to Your Debt When You Die? What Your Family Is — and Isn’t — Responsible For

Debt doesn’t automatically transfer to your children when you die. The estate generally pays valid debts, although co-signers, joint borrowers, spouses, and secured property can complicate the rules. And-One/Shutterstock

Death does not necessarily erase a mortgage, credit-card balance, medical bill, or personal loan, but it also does not automatically hand those debts to your children. Imagine a daughter sorting through her father’s mail after his death and finding a $14,000 credit-card balance, an auto loan, and several medical bills: seeing her father’s name on those statements does not by itself mean she should start paying them from her own checking account. The Consumer Financial Protection Bureau explains that creditors generally look to the money and property in the deceased person’s estate, and if the estate cannot pay and nobody else shares legal responsibility, the debt may ultimately go unpaid. Responsibility becomes more complicated when there is a co-signer, joint borrower, surviving spouse, secured property, or state law imposing responsibility for certain obligations. That being siad, here is what you need to know about what will happen to your debt after you’re gone.

Most Debts Become the Estate’s Responsibility