What happens to debt when someone dies?

Debt isn’t automatically written off when someone dies. Instead, the money needs to be paid back from the estate. If there isn't enough money in the estate to pay it off, the debt will be written off.

You can’t inherit debt from others. However, when the debt is part of a joint agreement (such as a joint mortgage or loan), the surviving partner will need to continue making repayments until the debt is paid. This includes things like joint mortgages, credit cards and any overdrafts with bank accounts.

The executors of the will are responsible for paying off any debts after someone dies. If there isn’t a will, then this job usually falls to the administrator of the estate.

The executor or administrator can take money from the estate to pay off any debts. They may also need to sell any property in the estate before debts can be paid off in full. If there isn't enough money in the estate to pay off the debt, the debt is written off – the executor or administrator isn't responsible for paying off the debt out of their own money.

Before paying off any debts, the executor or administrator should first pay for the funeral and set aside money for probate or administering the estate. You can find out more about the cost of probate here.

After this, debts must be paid off in the following order:

1. Mortgages and secured loans: there may be life insurance to help pay off the rest of the mortgage. If not, the property may have to be sold.

2. Priority debts: the most common priority debts that need to be paid after someone dies are council and income tax.

3. Unsecured debts: credit card debt and utility bills.

Step 1: Speak to financial organisations

The first thing you need to do is reach out to all the organisations who are owed money from the estate. They’ll be able to give you a final statement outlining any remaining debt. They’ll also be able to make sure any direct debits or standing orders are cancelled.

After speaking to banks, building societies and other financial organisations, you'll have a clear picture of any debts owed by the estate.

Step 2: Check if they had life insurance

It’s important that you check if your loved one had life insurance. Some life insurance policies pay off the whole mortgage after someone dies, and there may be a death in service benefit. If they did have life insurance, find out the policy details and what can be claimed before repaying any debts.

Step 3: Apply for probate

If you’re an executor of the will, you can start closing down accounts and paying off debts before you have a grant of probate. If you’re the administrator of the estate, you may need to apply for probate before you can sell property, close accounts and pay off debt. You can find out more about when probate is required.

If you know you have to get probate and need help applying, please give our friendly specialists a call on 020 3695 2090.

Step 4: Pay off the debt

Once you’ve got probate, you're free to close accounts and sell property. You can then pay off any outstanding debts before distributing assets to beneficiaries.

If there isn’t enough money in the estate to pay off all the debts – even after the sale of assets – the debt will be written off. This is what’s known as an “insolvent estate”.

If the estate you’re dealing with is particularly complex, you could benefit from using an estate administration service.

This may be a good idea if you’re struggling to work out exactly how much debt is owed. Estate administration can also be a good option for people who have very little free time between work and family life.

At Farewill, we offer a full estate administration service from just £1,500. This includes everything from tracking down accounts, to applying for probate, to paying off any debts and taxes. You can find out more about Complete probate, our estate administration service.

An estate is classed as "insolvent" if there isn't enough money to pay off all of the outstanding debts. If the debt can’t be paid off after the sale of property and other assets, it is simply written off.

If you've recently lost your partner and have been left with a joint mortgage, loan, or credit card to repay, you may benefit from speaking to a debt counsellor.

Debt counsellors offer professional, impartial advice that's free of judgement. They can also help to make sure you've applied for all possible payouts and benefits to help with your specific situation.

You can find out more about getting advice with debt here.

• Outstanding debts must be paid from the estate when someone dies.

• If the debts can’t be paid, the estate becomes insolvent.

• The executors of the will are responsible for organising the repayment of debts. If there isn’t a will, the next of kin is responsible for repaying any debt.

• If the debt was part of a shared loan or agreement – such as a joint mortgage – the surviving partner has to repay it.

• If you’re struggling to work out how much debt is owed, you can speak with a professional estate administration service. You can find out more about Complete Probate, our estate administration service.