What happens to debt when you die?

[mumofmonSTARsOfBethlehem]

Am not about to do anything daft - son't worry!

just wondered what happened to it?

I think it becomes part of your estate and has to be settled before any payments are made to beneficiaries

what if all you have is debt? ie no properyt to 'leave;', no car etc

If there is any money that you have, eg. your house or life insurance, debts are taken out of that. But if youre broke and the debt is solely in your name then it is written off. Also your house won't be forcibly sold (putting family on the street) but there will be a lein put on it. If the house is ever sold then the debt is automatically taken out before you get the money.

I think it just goes to debt heaven
Seriously - am not actually sure - maybe a legal executry/wills type person will have the answer?

Your debts will be paid out of any assets that you have, before any legacies are paid. If you don't have enough assets to cover all of your debts then your estate will be 'insolvent' and your debtors will be paid in a strict order, the same way as insolvency in your lifetime.

your debts don't pass under your will so don't worry, you can't inherit your parents' debts, you just wouldn't inherit any assets, if the estate was insolvent

The old saying used to be that when you died your debt died with you. Unfortunately my SIL found this to be untrue when her mother died. Her mum wasn't in a lot of debt, she had been paying weekly for a TV, she still had £20 left to pay on it & the shop owner came & asked SIL for the last £20 or give the tv back.

My parents don't have any assets as such. They both live in rented housing for the elderly, they rented houses all their lives, they don't have savings as such, maybe a few ££ to fill their oil tanks from time to time.

If they are in debt (which I doubt) & have no assets when they die... who pays that??

would it get passed to a spouse(assuming you are married) or partner (if you aren't) ?

Debt is non-transferrable on death unless you have signed an agreement saying you will take on someone else's debt on their debt (ie: as guarantor). The tv was in fact not your SIL's so the shop owner was reclaiming effectively from the estate. A lot of people without any children are now living beyond their means deliberately with every intention of dying in debt. Might work if you knew your date of death...?

Doh! Should be "on their death", of course.

the tv would have still belonged to the shop under the credit agreement so that's a bit different. what i meant is that things like unsecured credit card bills don't pass to beneficiaries. All assets, including personal posessions would need to be liquidated though to pay off as much as possible.

debts in joint names become the liability of the survivor.