Which debts are forgiven when someone dies?
Summary
When a person dies, some debts are paid from their estate while others are forgiven if there is not enough money to cover them. Family members usually do not have to pay the debts unless they co-signed or are legally responsible under state law.Key Facts
- Debts belong to the person who borrowed the money, not their family members.
- Credit card debts are unsecured and usually must be paid from the estate; if there isn’t enough money, the debt is forgiven.
- Joint credit card holders or spouses in certain states may be responsible for credit card debts after death.
- Personal loans without a co-signer are typically paid from the estate; if there are insufficient funds, remaining debts may be discharged.
- Federal student loans are forgiven completely when the borrower dies; some private student loans may also be forgiven depending on the lender.
- Medical bills can be paid from the estate but family members usually don’t have to pay unless they agreed to.
- If the estate does not have enough assets to cover debts, some creditors may not be paid and the debts may be canceled.
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