What happens to your debts when you die?

In an ideal situation, when you pass away, your heirs would be able to receive the assets that you want to leave to them without any creditors involving themselves in the process. Unfortunately, ideal situations aren’t always realistic, and some of the debts that you owe upon your passing still need to be paid from your estate. Tucson, Arizona residents should educate themselves on how different types of debt are handled after death in order to make all of the necessary arrangements in their estate plan.

Credit card debt

Credit card debts are considered unsecured debt, which can be beneficial to your estate. Unsecured debts are debts that collectors are forced to write off if your outstanding credit card debts if your estate cannot pay it. However, if there are any other names on the account as cardholders, they are responsible for the outstanding debt.


If you are the sole owner of a home and property and the mortgage has not been paid off, your estate will be responsible for repaying the loan. If someone else’s name is on the mortgage loan with yours, they are responsible for repaying the loan. Finally, if you leave the house and property to someone else, they assume responsibility for the debt.

Car loans

Unless you paid cash for a vehicle, there is a chance that the company your vehicle is financed through will still try to recover their money. Your estate is legally responsible for repaying the vehicle loan to the financing company, but if they do not, the vehicle can be repossessed by the company that owns the loan. This is because car loans are considered a secured debt.

Student loans

Student loans are becoming more and more common as the price of higher education continues to increase. However, they are considered unsecured debt, which means the entities that offer these loans have no way to demand repayment if you pass away without having fully paid them off. All federal loans are discharged upon the death of the borrower.

Many people use liquid assets and life insurance policies to ensure that outstanding debts get paid off upon their death, so their estate is not taken to court by creditors. You can work with your estate planning attorney to make these arrangements.