When someone dies, their debts become a liability on their estate. Surviving relatives will not usually be responsible for paying off any outstanding debts, unless they acted as a guarantor or are a co-signatory of the debt. The executor of the estate, or the administrator if no will has been left, is responsible for paying any outstanding debts from the estate.
Key points
✓Debts in the deceased's name only can be paid out of the value of the estate, and a surviving spouse, civil partner or relative cannot be required to pay them out of their own pocket unless they provided a personal guarantee.
✓If the estate does not have enough assets to pay off an individual debt, the debt will be written off.
✓If two or more people took out a loan in all their names, in most situations the outstanding debt passes in full to the surviving people who took it out.
✓The Student Loans Company will cancel the person's student loan once you tell it about the death and send evidence.
✓Funeral and administration costs can be covered first, then secured debts, priority debts such as Income Tax and Council Tax, and unsecured debts such as utility bills and credit cards.
Do you inherit someone's debt?
Surviving relatives will not usually be responsible for paying off any outstanding debts, unless they acted as a guarantor or are a co-signatory of the debt.
Debts in the deceased's name only can be paid out of the value of the estate
If the estate does not have enough assets to pay off the debt, the debts will be written off
A surviving spouse, civil partner or relative cannot be required to pay off individual debts out of their own pocket, unless they have provided a personal guarantee
If no estate is left, there is no money to pay off the debts and the debts will usually die with the person
If a debt is in joint names, in most situations it passes in full to the surviving people who took it out
If creditors contact you, let them know the person has died and that you are going through the legal process of dealing with the estate. Once they know this, they should back off and give you time to sort out the estate and debts. Our dealing with debt guide covers which debts to deal with first when money is short.
What happens to debt when someone dies, the estate process
The executor of the estate, or the administrator if no will has been left, is responsible for paying any outstanding debts from the estate. The probate steps on this page are the England and Wales ones, taken from GOV.UK and MoneyHelper guidance.
1
Work out what is owed
Go through papers and financial statements and make a list of everything owed. Check whether there is a guarantor for any of the debts, and whether the person took out any insurance to pay off the debt, for example a life insurance to pay off the mortgage in case of death.
2
Tell the creditors
Contact each creditor and let them know the person has died. Tell them you are going through the legal process of dealing with the estate and ask for a letter or statement showing the outstanding balance on the debt. For an individual debt, they should also stop taking out regular payments from the deceased's bank accounts until the debt is settled in full.
3
Give unknown creditors time to come forward
Place a notice in The Gazette giving any creditors 2 months to claim anything they are owed. MoneyHelper also advises putting a deceased estates notice in a newspaper local to where the person lived. Do not distribute the estate's assets until the 2 months is up. If you do and the estate then cannot afford to pay a debt, you may have to pay it yourself.
4
Pay the debts in order
Before any of the debts are paid, you are first allowed to cover any funeral expenses and the costs involved in the administration of the estate. The debts are then paid in a specific order: secured debts such as mortgage repayments, priority debts such as Income Tax and Council Tax, and unsecured debts including utility bills and credit cards.
5
Distribute what remains
Once you have paid any debts and taxes, or you are sure the estate has enough money to do so, distribute the estate according to the will, or according to the law if there is no will.
If there are more debts than the estate can pay back, this is called an insolvent estate. If there is not enough money in the estate to pay off all the debts, the most important are paid off first. Any remaining debts are likely to be written off. You may have to pay any remaining debts and tax bills yourself if you distribute the estate and do not keep enough money or assets in the estate to pay them. Being an executor does not mean you will be held personally liable for any debts of the estate, but there are some exceptions and taking on the responsibility comes with some risks. Our probate guide covers applying for the right to deal with an estate.
Joint debts, when you ARE responsible
If two or more people have taken out a loan in all their names, in most situations the outstanding debt will pass in full to the surviving people who took out the loan. A joint mortgage and a joint current account with an overdraft are examples of joint debt.
If you are joint tenants, the deceased's share of the property automatically passes to the other owner or owners, so the property does not form part of the estate and cannot be considered when paying back outstanding debts
The surviving owner will continue to be responsible for making the repayments on the loan as normal
If you are tenants in common, the deceased's share of the property can be taken into account when paying back debts
If it is a joint debt, the name of the deceased can be removed from the debt
For joint debts, check the terms of the loan, ask the creditor to take your deceased partner's name out of the bills and transfer all future bills to your sole name, and if you cannot afford to pay each instalment in full, see if you can renegotiate the repayments to an amount and schedule you can manage.
If there is a guarantor for a debt, the guarantor remains responsible for any debt covered by a guarantee if it is not paid by the estate.
What about a spouse's debts?
Any surviving spouse, civil partner or relative cannot be required to pay off individual debts out of their own pocket, unless they have provided a personal guarantee.
Debts in your spouse's name only can be paid out of the value of the estate
A joint mortgage and a joint current account with an overdraft are examples of joint debt
If you were tenants in common, your spouse's share of the property can be taken into account when paying back debts
If the item securing a loan is owned only by your spouse, even if other people have use of it, it can be used to pay off outstanding debts
Types of debt and what happens to them
Type of debt
What happens
Mortgage in the deceased's name only
A secured debt, paid ahead of priority and unsecured debts. If the property is owned only by the deceased, it can be used to pay off outstanding debts.
Joint mortgage
If you are joint tenants, the property passes to the other owner and the surviving owner continues to be responsible for the repayments.
Credit card in the deceased's name only
An individual debt, paid out of the value of the estate and written off if the estate cannot cover it.
Loan or overdraft in the deceased's name only
An individual debt, paid out of the value of the estate and written off if the estate cannot cover it.
Joint loan or joint overdraft
In most situations the outstanding debt passes in full to the surviving people who took out the loan.
Student loan
The Student Loans Company will cancel the person's student loan.
Council Tax and Income Tax
Priority debts, paid after secured debts and before unsecured debts.
Utility bills and credit cards
Unsecured debts, paid after secured and priority debts.
Overpaid benefits
The Department for Work and Pensions can recover benefit overpayments from a person's estate.
Student loans and death
The Student Loans Company (SLC) will cancel the person's student loan.
You need to let SLC know that the person has died and provide evidence, for example an original death certificate, as well as the person's customer reference number
SLC lists an original death certificate, an original coroner's interim certificate, a copy of the coroner's certificate stamped by the coroner and a copy of a foreign death certificate as evidence
SLC cannot cancel any loans without evidence
How to deal with creditors after a bereavement
1
Inform creditors of the death
Contact each creditor and let them know the person has died. Ask for a letter or statement showing the outstanding balance on the debt. Once they know this, they should back off and give you time to sort out the estate and debts.
2
Check who is responsible for each debt
A surviving spouse, civil partner or relative cannot be required to pay off individual debts out of their own pocket, unless they have provided a personal guarantee. A guarantor remains responsible for any debt covered by a guarantee if it is not paid by the estate.
3
Give the creditor the executor's details
For individual debts, give the creditor the name and contact details of the executor or administrator for the deceased's estate, who are responsible for making sure the debt is paid from the estate. If you are the administrator of the estate, you will need to have probate or a grant of administration.
4
Tell DWP if benefits were overpaid
DWP will write to you once probate has been granted to ask for the information it needs. You should not distribute the estate until you know what needs to be repaid, because if you do you may have to pay back the money yourself.
5
Get advice if the estate is large or complicated
If it is a large or complicated estate, you might want to consider seeking the advice of a solicitor or probate specialist.
6
Get free debt advice if you are struggling
It is always best to talk things through with an experienced free debt adviser before you make a decision about what to do. MoneyHelper's Debt advice locator tool finds free and confidential debt advice online, over the phone or near to where you live.
Whoever deals with the estate must pay any debts and settle the taxes for the person who died, which includes paying any unpaid bills, paying any unpaid personal taxes and repaying any overpaid benefits. Our funeral costs guide covers who pays for the funeral.
Surviving relatives will not usually be responsible for paying off any outstanding debts, unless they acted as a guarantor or are a co-signatory of the debt. Debts in your parent's name only can be paid out of the value of the estate, and if the estate does not have enough assets to pay off the debt, the debts will be written off.
Are student loans written off when you die?
The Student Loans Company will cancel the person's student loan. You need to let it know that the person has died and provide evidence, for example an original death certificate, as well as the person's customer reference number.
Can debt collectors chase me for my spouse's debts?
A surviving spouse, civil partner or relative cannot be required to pay off individual debts out of their own pocket, unless they have provided a personal guarantee. If creditors contact you, let them know the person has died and that you are dealing with the estate. Once they know this, they should back off and give you time to sort out the estate and debts.
What if the estate cannot pay all the debts?
If there are more debts than the estate can pay back, this is called an insolvent estate, and if there is not enough money to pay off all the debts, the most important are paid off first. Any remaining debts are likely to be written off. You may have to pay any remaining debts and tax bills yourself if you distribute the estate and do not keep enough money or assets in the estate to pay them.