What Happens to Your Outstanding Debt When You Die?

Written by scott yoder
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What Happens to Your Outstanding Debt When You Die?
A legal process may be required to settle debts after you die. (debt defined image by Christopher Walker from Fotolia.com)

There are a number of possibilities concerning what will become of your personal debts in the event of your death. In some cases, your resources may be deemed insolvent and the debt must be written off by the creditor. In other cases, people who have cosigned on the account must assume responsibility. Your resources may go into probate, where legal proceedings will determine how your remaining resources will be allocated.

Credit Cards

A credit card debt in which you are the only account holder cannot become the obligation of someone else after your death. However, if the card is a joint account, then the other party becomes legally responsible for the entire balance after your death.

Your Estate

The executor of your estate has the responsibility of delegating your assets after your death. If you have an outstanding debt, the creditor may be able to legally pursue various assets to settle the debt.

Probate Court

If you have a lot of debt at the time of your death, the state of your assets may be determined in probate court. This is a legal process in which the court will oversee the distribution of your assets. Disputes over your assets and claims by creditors will be evaluated and settled in this process.


Some of your assets, such as retirement accounts, brokerage accounts and insurance policies are not subject to probate. In these cases, the assets are passed onto the beneficiaries and are not subject to collection for other personal debts you have at the time of your death.


A common misconception people have is that family members become responsible for their debt after their death. This is not true unless the family member was a co-signer or joint account holder on the debt in question. However, family member may lose out on inheriting assets from your estate that have to go toward settling your debts.

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