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The last thing you probably want to think about is what happens to debt when you die. Generally speaking though, in this situation, any unpaid sums will usually be deducted from your estate.
Still, what happens may depend on the type of debt.
To quote a spokesperson from the Money Advice Service: “Technically speaking, if you pass away, it is the responsibility of your estate to pay any debts. If you have no estate, or the estate isn’t sufficient to cover all liabilities, they get written off and creditors cannot chase surviving family members, no matter how big the debt. However, there are some exceptions.”
The executor of the will, or the administrator, is responsible for making sure as much of the deceased’s outstanding debts are paid as possible. As mentioned above, in many cases this will come out of the estate’s value.
Exceptions can arise in the form of joint debts and guarantors. In the case of the former, any outstanding sums will pass to the other person detailed on the application. For example, if the deceased took out a mortgage with another individual, the surviving person would now be responsible for making these payments.
It’s a similar system for guarantors. If someone was named as a guarantor on an account of the deceased, that individual should now have to pay off those debts.
Assuming the value of the estate does not cover your debts, then anything remaining over should be written off upon your death. However, your creditors will still be paid as much as possible. This means any larger debts could influence how much money your loved ones receive through inheritance.
According to Age UK, around 20% of people over 60 owe money on a mortgage, credit card, or loan. If you’re struggling to make repayments and want to have your debts resolved to stop these from potentially adversely affecting your family, then it’s time to do something about it.
Through a debt solution such as an IVA, you could have your debts resolved in less than six years. In this situation, your family home could stay in the family – and your creditors won’t end up taking a large portion of any inheritance.
To find out more information, get in touch today. Our team of advisors are here and ready to answer any questions you might have.
Debt write off applies to unsecured debts and on completion of an IVA. A debt write off amount of between 20% and 80% is realistic, however the debt write off amount for each customer differs depending upon their individual financial circumstances and is subject to the approval of their creditors.
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Free money help and advice can be found at the MoneyAdviceService.org.uk