What Happens To Debt After You Die

Published by Tony Savage on September 29, 2016

Generally all of your debt, mortgages, credit card debts and car loans, will need to be paid back when you die.

The executor you appoint in your will to act for your estate will sell sufficient of your assets to pay all of your debts.

For bank mortgages over your land, the executor of your will uses the assets in your estate to pay off the mortgage. If there is enough money within your estate to pay off the mortgage, the executor may distribute the property which is mortgaged to the beneficiaries of your will , depending on the instructions in your will. A mortgage could also be paid out from proceeds of a life insurance policy.

If your estate can’t pay off the mortgage and the beneficiaries can’t afford to do so either, then the executors of your will have to sell the property, pay off the debt using the proceeds of the sale and distribute the balance according to the instructions in your will.

Will your executor or beneficiaries have to pay any unpaid debts?

Your executor and beneficiaries are not responsible for debts that cannot be paid by your estate. If someone else has co-signed on a credit card debt or loan, they will be liable to pay it off even after your death.

‘Authorised users’ on credit cards are not responsible for paying the card holder’s outstanding debts.

If you co-own a property with someone as a “Joint Tenant” rather than as a tenants in common, then the surviving Joint Tenant/s acquire the whole property automatically independent of your will because the property held in joint tenancy does not form part of the estate of the tenant who dies.

Your executor and beneficiaries are not responsible for debts that cannot be paid by your estate.

Tony Savage — WRMK Lawyers

If my estate can’t pay off my debts, what happens?

If there are not enough assets or money in the estate to pay all of your debt, then the remaining debts are not required to be paid by your executor, relatives or beneficiaries.

If collection agencies still contact relatives about paying these debts, they should consult a lawyer.

Still have questions? Contact author Tony Savage here to find out more.

Check out our lastest Wills and estates service blog posts

View All Wills and estates Blog Posts

Do it online

Did you know you can pay your bill online?

Here's how


They have the personal touch that makes you feel like a customer and not a number. They deliver on commitments in a timely manner.

Contact Us

Questions? Comments? Please feel free to get in touch & let us impress you with what we have to offer