Skip to content
United Settlement
  • Manage Your Debt
    • get-startedGet Started
    • settlementDebt Settlement
    • consolidationDebt Consolidation
    • debt-managmentDebt Management
    • bankruptcyBankruptcy
    • credit-cardCredit Card Debt
    • businessBusiness Debt
    • car-loanAuto Loan Debt
    • student-debtStudent Loan
  • Understand Your Debt
    • credit-cardCredit Card
    • business-2Small Business Debt
    • medicalMedical
    • loansLoans
    • umbrellaCredit Card Relief
    • interest-ratesInterest Rates
    • student-debtStudent Debt
  • Tools & Resources
    • faqFAQs
    • credit-cardCredit Guidance
    • calculatorCalculator
    • call-usContact Us
    • contact-usAbout Us
  • More
    • Debt Settlement
    • Debt Consolidation
    • Reviews
    • FAQs
    • About Us
    • Contact Us
    • Blog
    • Sitemap
    • Debt Relief by State
    • Careers
Debt Relief & Settlement Programs
Logo
United Settlement
phone icon 888-574-5454
client icon Client Log In
  • More
    • About Us
    • Proven Results
    • Reviews
    • Contact Us
    • Debt Settlement
    • Debt Consolidation
    • Debt Management
    • Business Debt Relief
    • Credit Card Debt Relief
    • Debt Relief by State
    • FAQs
    • Blog
    • Sitemap
    • Careers
Qualify For Debt Relief
Debt Relief & Settlement Programs
  • Manage Your Debt
    • get-startedGet Started
    • settlementDebt Settlement
    • consolidationDebt Consolidation
    • debt-managmentDebt Management
    • bankruptcyBankruptcy
    • credit-cardCredit Card Debt
    • businessBusiness Debt
    • car-loanAuto Loan Debt
    • student-debtStudent Loan
  • Understand Your Debt
    • credit-cardCredit Card
    • business-2Small Business Debt
    • medicalMedical
    • loansLoans
    • umbrellaCredit Card Relief
    • interest-ratesInterest Rates
    • student-debtStudent Debt
  • Tools & Resources
    • faqFAQs
    • credit-cardCredit Guidance
    • calculatorCalculator
    • call-usContact Us
    • contact-usAbout Us
  • More
    • Debt Settlement
    • Debt Consolidation
    • Reviews
    • FAQs
    • About Us
    • Contact Us
    • Blog
    • Sitemap
    • Debt Relief by State
    • Careers
United Settlement » Blog » What Happens to Your Debt When You Die?

What Happens to Your Debt When You Die?

July 20, 2021

 

Living with debt is hard enough, but what happens to it after you pass away? Will you have to deal with debt that’s not yours if a loved one passes away? What happens to your parent’s debt when they die?

It’s difficult to think about death, but understanding what happens to debt when someone passes away is important to protect you and your loved ones from the additional burden of debt. Keep reading to find out what happens to debt when you die.

Does Debt Go Away When You Die?

Most debts don’t suddenly disappear when you pass away. With a few exceptions, your debt will still need to be paid off — plus interest — if you die. Debts are most often paid using money from your estate. Your estate is the total of all of your possessions and assets.

However, different types of debt and whether the debt has another owner can change how the debt needs to be repaid.

Who Pays Your Debt When You Die?

Although many debts are paid by your estate when you pass away, that’s not always the case. For a debt to fall to your estate, you must be the only person to own the debt. Situations where someone else may be liable for your debt when you die include:

  • You Live in a Community Property State: Some states require your spouse to cover any debts you leave unpaid when you pass away. These states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.
  • You Have a Joint Account Holder: If you and another person are owners of an account that owes money, your joint owner will have to take responsibility for the debt if you die.
  • Your Loan Has a Co-Singer: A co-signer is someone who agrees to pay back a loan if you cannot. This includes if you pass away before paying off the debt. Your loan co-signer will take over ownership of the loan and be required to continue making payments.

Does the Type of Debt Affect Who Pays for it After You Die?

In addition to situations where another person may be responsible for your debt due to the ownership of a loan or account, the type of debt you have can change what happens to it when you pass away.

Both unsecured and secured debt can be paid by your estate. If your estate doesn’t have enough money to cover the full amount of the debts, secured assets can be sold to pay back their loans. For example, your estate can’t cover the cost of your car loan. The lender repossesses the vehicle and sells it to recoup the debt.

Unsecured debt such as credit cards or medical debt, however, doesn’t have assets to be sold to cover the remaining balances. In most cases when an estate doesn’t have the money to pay back the balance, the debt goes unpaid and the creditor writes off the loss.

What Happens to Credit Card Debt When You Die?

As long as you are the only account holder on the credit card, your estate is most likely responsible for paying off any remaining balances. In the event your estate doesn’t have the funds to do so, the credit card company will be out of luck collecting the debt.

The exception is if you have a joint account holder. This is a person who opened the account with you and is considered a joint owner of the account. Joint account holders aren’t the same as authorized users. If you named an authorized user on your account, they will not be responsible for repaying your credit card debt.

What Happens to Student Loan Debt When You Die?

Student loan debt works a little differently than other types of unsecured debt. Federal student loans are forgiven if the primary borrower passes away. In most cases, the federal government will also waive your co-signer’s responsibility to repay a federal student loan if you die.

Private student loans, however, are not usually forgiven upon your death. That means any co-signers will be responsible for making continued payments on your debt. If you don’t have a co-signer on your private student loans, the remaining balance will be paid by your estate. In community property states, such as California and Texas, your spouse must repay the debt, even if they are not a co-signer on the loan.

What Happens to Medical Debt When You Die?

The rules for repaying medical debt after someone dies vary between states. This makes it complicated to know exactly what happens to your debt when you die. In most cases, medical debt is the first debt to be collected after your passing. Your estate may also be responsible for paying back any money you received from Medicaid after turning 55 and can put a lien on your home to recoup payments.

It’s recommended that you consult an attorney to figure out the laws and guidelines for repaying medical debt after someone dies in your state.

Planning For What Happens to Debt When You Die

More than likely, your estate will be responsible for paying back your debts after you pass away. However, any money used to pay off debt is less money that goes to your heirs as an inheritance. If your money is used to pay off debts, your family may struggle to afford funeral costs or other expenses related to your death.

The best thing to do is to make a plan to manage and pay off your debt now before it’s an issue for your loved ones. If you’re struggling with debt, you may need to seek professional debt relief to help you manage or consolidate your debt. Feel free to give us a call at 888-574-5454.

Gabriel Gorelik, CEO & Co-Founder
Gabriel Gorelik

Gabriel Gorelik paves the way for customer service and operations at United Settlement. He is passionate about numbers and holds a strong belief in helping anyone with their debt. Before United Settlement, Gabriel received his BS in Finance & Economics from Brooklyn College. After graduation, Gabriel went on to build his first financial services company where he managed over 1,000 business clients. He understands the importance of client satisfaction, professionalism, and exceeding expectations.

Share this:

  • Click to share on Twitter (Opens in new window)
  • Click to share on Facebook (Opens in new window)

Related

Search Blog

Are you in debt? we can help

  • Amount
  • Contact

How much do you owe?

Excellent

Based on 377 reviews.
Overall 4.4 out of 5 stars

View All Reviews

Annette Huggins

March 14

That when it seems like nobody can help United will.

This was a great experience for me. I am just starting but Madelene Gallon made me feel like we were friends for years. She tried to make me feel that she would help me and make sure I got the best deal...

Kiirstin

March 01

Kind and caring

Had been searching for a while for a company I could trust to get me out of crippling debt. Really didn’t think it was possible. Spoke to Ben at United Debt and he assured me that not only was it possible,...

Kiirstin

March 01

Kind and caring

Had been searching for a while for a company I could trust to get me out of crippling debt. Really didn’t think it was possible. Spoke to Ben at United Debt and he assured me that not only was it possible,...

Dylan

February 28

Quick, easy assistance!

I've been working with Ben at United Debt to help me organize and get out of debt for once - I've been dealing with debt for ages and Ben showed me some simple ways to begin dealing with things to keep...

Takota Carrie

February 14

I need help

I really appreciate

JONICA Amber PIRON

December 21

Great!

Renika went above and beyond today to help me. She is wonderful to work with! Thank you again Renika for all of your help today! Happy Holidays to you!

Jayvon

December 20

Paying back

They where great listeners

Shawn abetha

December 14

Everything

Thanks

Robert Phillips

November 23

Do your home eork

Paid several thousand dollars and nothing done. Ended up settling 90%by myself. This is a preatory company. So do your homework. This will never post.

Dm

November 18

Customer service is truly helpful

Renika was so helpful. My account was paid off but I kept receiving notifications. She cleared up the situation.

Jose Rosa

November 16

Great Customer Service

Renika did a wonderful job handling my questions and transactions. She is very patient on the phone and took care of my needs accordingly.

Russ

November 03

Very helpful

Renika did a great job in answering all of my questions in a timely manner. She was polite and friendly. Keep her on the payroll.

Anthony Desoto

October 31

What's Important to me is United Settlement Costumer service !

United Settlement Costumer service is Amazing Everyone is Professional . I am so happy choosing them with my card Debt. thank you all for helping me out .

Ri cky

August 23

That this company has integrity!

A responsive company that keeps it clients up to date and fully informed. I like the fact that I can send them a text and be guaranteed an answer within 24 hrs.

Jerry Bolandis

June 04

Professional and focused on facts and truth not hype. Excellent. We want to know facts.

Great work very professional and great updates. Communication is excellent.

janice head

October 25

trust them

Excellent. Also each time i call there they treat me with respect even though they are probably thinking jerk . You sure have made mess of your life. but they have been taught to smile smile smile. this...

Scott W O'Neill

August 01

Thanks for all your help and negotiations.

Thanks for the update! I have faith in you guys and will continue my payments. Thanks for all your help and negotiations.

Cassandra Robinson

July 30

That A Settlement Was Entered.

I Absolutely Love You All At United Settlements. You All Have Saved My Credit Solutions. I Would Refer Everyone To You Services.

Mildred Yvonne Sherron

July 16

The results of the settlement attempts.

So far, I have found United Settlement more than satisfactory. Very conscientious and very efficient in providing a service in debt settlement. Thank you and all the members of your team who are assisting...

Diana Cardona

July 16

Tough Financial Hard Times During Covid-19

I signed up with United Debt Settlement because of large credit card debts, which had taken a financial toll on my credit. UDS has an outstanding reputation assisting clients like me achieve financial recovery...

  • Contact Us
  • 240 West 37th Street
    Suite 400
    New York, NY 10018
  • (888)-574-5454
  • [email protected]
  • Privacy Policy
  • Terms & Conditions
  • Debt Relief Services
  • Debt Settlement
  • Business Debt Relief
  • Credit Card Help
  • Debt Consolidation
  • Debt Management
  • Student Loan Help
  • Careers
Learn more about debt relief


    • facebook
    • Google Plus
    • Twitter
    • YouTube
    • Instagram
    • Linkedin
    • facebook
    • Tools & Resources
    • Contact Us
    • About Us
    • Blog
    • Debt Calculator
    • Frequently Asked Questions
    • Sitemap
    • Reviews
    • Client Login
    Free Savings Estimate
    Apply Here
    Clients who stay according to debt relief program can realize approximate savings of 50% before fees, or 25% including fees, over 24 to 48 months. All claims are based on enrolled debts. Not all debts are eligible for enrollment. Not all clients complete our program for reasons such as: their ability to save sufficient funds. Estimates based on prior results, which will vary based on specific circumstances. We do not guarantee that your debts will be lowered by a specific amount or percentage or that you will be debt-free within a specific period. We do not assume consumer and/or business debt, provide tax, bankruptcy, accounting, legal or credit repair services/ advice. Our program is not available in all states. Please contact a tax professional to discuss tax consequences of settlement. Please consult with a bankruptcy attorney for more information on bankruptcy. If you have any additional questions please contact us. NMLS ID: 1947026
    Copyright 2023. United Debt Settlement, LLC
     

    Loading Comments...