What happens to debt when you die: who pays, the family home, and debt collectors

No. As a rule, a person's debts do not go away when they die. Instead, they are generally paid out of the money or property the person left behind, which is called their estate.^[1][2]

What changes is who can be asked to pay. By law, family members usually do not have to pay the debts of a deceased relative from their own money.^[1] The estate pays what it can, in the order your state's law sets, and if there is not enough money in the estate to cover a debt, it usually goes unpaid.^[1][2]

The CFPB puts it simply: if there is no estate, or the estate cannot pay, the debt generally will not be paid.^[3] That is the answer to the common question "where does debt go when you die": it stays with the estate, and it shrinks or disappears only if the estate runs out.

This guide is general information, not legal advice. Probate rules differ from state to state, and if a large estate, a house or a business is involved, talk to a probate lawyer or a legal aid office.

The person in charge of the estate settles the debts. If there is a will, that is usually the executor named in it. If there is no will, the court may appoint an administrator, personal representative or universal successor.^[1]

That person is responsible for settling the deceased person's debts using the estate's money and property, under the state's probate rules.^[1] Being the executor does not make you personally liable for the debts. But you can become responsible if you were legally responsible for resolving the estate and did not follow your state's probate laws, for example by handing out property to heirs before valid debts were dealt with.^[1]

Some small estates do not go through a full probate process. The CFPB's official interpretation of the debt collection rules recognizes that a person can be authorized to act for an estate through informal probate, summary administration, universal succession or a small-estate affidavit.^[7] Your local probate court's self-help center can tell you which process applies.

There are exceptions. You may be personally responsible for a deceased relative's debt if you:^[1][2]

• Cosigned the debt, such as a car loan or a personal loan.^[1]
• Were a joint account holder on a credit card or loan, as opposed to an authorized user.^[2]
• Are the surviving spouse in a community property state, which can require surviving spouses to use jointly held property to pay the debts of a deceased spouse.^[2] The CFPB lists Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin, and Alaska if a special agreement was signed.^[2]
• Are the surviving spouse in a state that requires you to pay certain debts, such as some health care expenses.^[1]
• Were responsible for the estate and did not follow your state's probate laws.^[1]

Outside those situations, the debt belongs to the estate, not to you. That includes adult children: children do not inherit their parents' debts just by being their children.^[1][2] What you might inherit is whatever is left in the estate after valid debts have been paid.

Credit card balances are paid from the estate like any other unsecured debt.^[2] Who else is responsible depends on how the account was set up:

• Authorized users, people who had a card on someone else's account, generally do not have to pay the debt.^[8]
• Joint account holders share legal responsibility for the balance and can be asked to pay it.^[2]

A surviving spouse is not responsible for a husband's or wife's credit card debt just because they were married, unless one of the exceptions above applies, such as a joint account or community property rules.^[1][2]

If a card company or debt buyer later sells the account, the new owner steps into the same position: it can claim against the estate, but it cannot make relatives pay from their own money when they are not responsible.^[3]

This is the question most families face first. A mortgage does not go away when the borrower dies, but federal law gives heirs important protections.

The lender cannot call in the loan just because the home was inherited. Most mortgages have a "due-on-sale" clause that lets the lender demand full payment if the home changes hands. The Garn-St Germain Act stops lenders using that clause, for homes with fewer than five units, when the home passes to a relative because the borrower died, passes on the death of a joint owner, or passes to the borrower's spouse or children.^[4]

You can be recognized as the new homeowner. Federal mortgage servicing rules call a relative who receives the home after the borrower dies a successor in interest. Once the servicer has confirmed your identity and ownership, you are a confirmed successor in interest.^[9] When a servicer learns a borrower has died, it must promptly communicate with potential successors and tell them which documents it needs to confirm them.^[10]

Confirmed successors get the same treatment as the original borrower. The CFPB says servicers must treat them like an original borrower on the loan. Successor homeowners have a right to continue making the mortgage payments, and can be evaluated for help avoiding foreclosure if needed.^[11] A lender can generally also add an heir who already holds title to the mortgage without new ability-to-repay checks.^[12]

So if you inherit a house with a mortgage and want to keep it: tell the servicer about the death in writing, ask what documents it needs to confirm you as a successor in interest, keep the payments going if you can, and keep copies of everything. If you would rather sell, the mortgage is paid from the sale, and anything left goes to the estate.^[10][11]

Reverse mortgages work differently. With an FHA-insured reverse mortgage, known as a home equity conversion mortgage or HECM, the loan becomes due when the last surviving borrower dies.^[13]

Heirs typically have 30 days after receiving a due-and-payable notice to buy the home, sell it, or turn it over to the lender, and that time may be extended, up to six months in some cases.^[14] HUD says lenders may approve 90-day extensions with satisfactory documentation.^[13]

If the loan balance is more than the home is worth, heirs are protected: they can sell the home for at least 95 percent of its current appraised value, and the lender will accept the net proceeds as satisfaction of the loan.^[13][14] Heirs can also hand the property to the lender through a deed in lieu of foreclosure.^[13]

Federal student loans are discharged when the borrower dies. If a parent took out a Direct PLUS loan for a student, the loan is also discharged if that student dies.^[5] The CFPB says federal loans do not transfer to another person: relatives can notify the loan servicer, and the loan will be canceled.^[6] The servicer needs proof of death, such as a death certificate.^[5]

Private student loans are different. Some private lenders discharge loans at death and some do not, and in some cases private student loan debt may pass to a spouse or cosigner.^[6] Check the loan agreement and ask the lender directly.

If the person who died received Medicaid, the state may try to recover some of what it paid from their estate. For people aged 55 or older, states are required to seek recovery for nursing facility services, home and community-based services, and related hospital and prescription drug services, and may choose to recover for other services.^[15][16]

There are important limits. States may not recover from the estate of a deceased Medicaid enrollee who is survived by a spouse, a child under 21, or a blind or disabled child of any age, and they must have a process for waiving recovery when it would cause undue hardship.^[15] If you receive an estate recovery notice, ask the state Medicaid agency about these exemptions and the hardship waiver.^[15]

Debt collectors may contact the family after a death, but federal rules set firm limits. For these rules, the debt collection regulation treats a deceased person as a "consumer," and extends some of the consumer's protections to the people who act for them.^[17]

Who they may discuss the debt with. A collector can discuss a deceased person's debts only with the spouse, a parent if the person was a minor, a legal guardian, the executor or administrator of the estate, or a confirmed successor in interest.^[1][18] "Executor or administrator" includes any personal representative authorized to act for the estate.^[7] Collectors may not discuss the debts with anyone else.^[1]

Contacting other relatives. A collector can contact relatives or other people connected to the deceased only to find out who is handling the estate. It can usually contact each of them only once for that information, and it cannot discuss the debt.^[1] The CFPB adds that collectors are not allowed to mention the debt at all, or even reveal that they are calling about a debt.^[3]

No pressure to pay from your own money. It is illegal for debt collectors to suggest you are responsible for paying from your own money when you are not.^[2] Collectors are not allowed to suggest that you might be responsible for the debt if you are not.^[3] A collector that breaks the federal debt collection law can be sued for damages and legal fees.^[19]

Validation notices for the estate. When a collector knows or should know the consumer has died, it must send the validation information to a person it identifies by name who is authorized to act for the estate.^[20] That notice starts the same dispute rights as any other: if you dispute in writing within the validation period, the collector must stop collecting the debt, or the disputed part, until it sends you verification of the debt or a copy of a judgment.^[21][22]

1. Do not agree to pay on the phone. If you are not a cosigner, joint account holder or otherwise responsible, you do not have to pay from your own money, and a collector must not suggest you do.^[1][2]
2. Tell the collector who is handling the estate, or that there is no estate. Collectors are allowed to ask for the representative's contact details.^[1]
3. Ask for the debt in writing. If you are the executor, check the validation notice against the deceased person's records. The CFPB says you can dispute the debt within 30 days if it seems wrong.^[3][20] Our debt validation letter guide explains how a dispute works.
4. Stop the calls if you want to. You can tell a collector to stop contacting you. Email or send a letter, because a phone call is not enough. The debt does not go away, but the collector must deal with the estate instead.^[1] Our guide to your rights with debt collectors has sample wording.
5. Check the caller is real. Look up the company yourself before giving any information about the person who died; our phone number lookup lists numbers we have confirmed from official sources, and our scam guide explains the warning signs.^[3]
6. Report problems. You can complain to the CFPB and your state attorney general if a collector pressures you to pay a debt you do not owe.^[3]

No law wipes out all debts at death, but in practice several kinds end or are limited:

• Federal student loans are discharged.^[5]
• Unsecured debts such as credit cards and medical bills go unpaid if the estate does not have enough to cover them and no one else shared responsibility.^[1][2]
• Reverse mortgage shortfalls: heirs who sell for at least 95 percent of the appraised value are not chased for the rest.^[13]

Secured debts such as mortgages and car loans stay attached to the property. The estate, or whoever inherits the property, pays them to keep it, or the lender can take the property.^[4][11]

If a creditor accepts less than the full amount from you personally, for example as a cosigner, the forgiven amount can have tax consequences; our guide to paying a collection agency explains canceled-debt tax rules.

Telling the credit bureaus helps stop identity thieves opening accounts in the deceased person's name. A funeral home will usually tell Social Security about the death, so you may not need to report it there yourself.^[23]

You only need to notify one credit bureau: each says it will pass the notice to the other two.^[24][25][26] A spouse, executor or other authorized person sends a copy of the death certificate, the deceased person's details and their own identification:

• Equifax: Equifax Information Services LLC, P.O. Box 105139, Atlanta, GA 30348-5139.^[24]
• Experian: Consumer Assistance Center, P.O. Box 4500, Allen, TX 75013. Send a copy, not the original, of the death certificate.^[25]
• TransUnion: P.O. Box 2000, Chester, PA 19016.^[26]

The executor can also get the deceased person's credit report to see which debts exist. Our guide to finding out what debts are owed explains how to use a credit report to track down accounts and collectors.

1. Get several copies of the death certificate. Lenders, servicers and the credit bureaus all ask for one.^[5][25]
2. Find out who will handle the estate, and whether a will names an executor.^[1]
3. Do not pay debts from your own money until you know whether you are responsible for them.^[1][2]
4. Contact the mortgage servicer about the home, and ask what it needs to confirm a successor in interest.^[10]
5. Notify one credit bureau and ask for a copy of the deceased person's report.^[24]
6. Notify student loan servicers so federal loans can be discharged.^[6]
7. Keep a log of collector contacts, and report collectors that pressure relatives to pay.^[3]

If a collector sues the estate, or you, respond by the court deadline: our lawsuit guide explains how.^[3]