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What Happens to Debt When You Die

By: Michael Millington


Some things can last forever. Unfortunately that counts for debt as well. The end of someone's life doesn’t necessarily mean the end of that person's debt. There are some instances in which the debt doesn’t actually get passed down, but if the situation should arise it pays to know whether it affects you or not. There are multiple types of debts in existence, and here we will break down each debt and how it is affected by a passing.

Debt Type: Mortgage

If you have a house and you haven’t paid off the entirety of your mortgage then the debt will have to be taken care of. Normally that responsibility goes to someone who had a share in owning the house. If there is another owner on the house, the debt would fall to them to pay off. Should there be no co-owner to the house, the children of the deceased can choose to take on the debt of the house or they can sell it off. Even if they sell the home for less than the debt amount, they wouldn’t be responsible for the difference.

Debt Type: Credit Card

Credit card debt is pretty cut and dry as far as how it is handled upon the owner's passing. Much like with a mortgage, any joint holder of the account would be on the hook for the remaining balance. However, authorized users (generally people who can use the card but don’t have claim to the account itself) would not be obligated to pay off the rest of the debt. The only difference in the rule is for a spouse, as any debt incurred during the marriage would be their responsibility.

Debt Type: Student Loans

Contrary to popular belief, you CAN discharge student loan debt. The only way that will happen, unfortunately is if you pass away. Those who co-sign the loan would still be responsible for paying the loan. Much like the other debts we’ve covered, if you have a spouse and you incurred the debt while with your significant other your spouse will then be responsible for the debt.

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