What happens to debt when you die?
A common fear is that your family inherits your credit card bills, loans, or overdrafts. In the UK, this is generally NOT true. Debt is paid by your 'Estate' (your money and property), not by your relatives personally.
1 The Typical Timeline
If you take no action, this is the standard statutory process. Timescales are approximate but typical for 2026.
Accounts Frozen
Banks freeze sole accounts once notified. Joint accounts usually pass to the survivor automatically.
Probate & Creditors
Executor informs creditors using the 'Death Notification Service'. Creditors stop interest and charges.
Settlement
Debts are paid from the estate. If insolvent, creditors actially receive a pro-rata share (e.g., 1p in the £1).
2 Free Calculators & Checks
Inherited Debt Checker: A quiz to check if you are personally liable for a relative's specific debt.
Inheritance Debt Checker
The Estate Pays
The debt must be paid from the deceased's money/assets (the "Estate") BEFORE any inheritance is given out. If there is enough money, it gets paid. Family members do not pay from their own pockets.
Estate Solvency Calculator: Input assets and debts to see if the estate is 'Insolvent' and who gets paid.
Estate Solvency Calculator
1. Assets
2. Priority Payments
3. Unsecured Debts
There is a shortfall of £1,000.
Creditors will receive approx 90p for every £1 owed.
The rest is written off. You do not pay.
The Golden Rule: The Estate Pays
When you die, everything you own (house, savings, car) becomes your "Estate".
The Executor (person managing your will) uses the Estate to pay off debts in a strict legal order.
- If there is enough money: Debts are paid, and the rest goes to family.
- If there is NOT enough money: The Estate is "Insolvent". The debts are written off. Family do not pay the difference.
The Priority Order of Payment
Executors must pay debts in this order. If they pay the wrong people first (e.g., family), they can be personally liable!
- Secured Debts: Mortgages (property may be sold).
- Funeral Costs: Reasonable costs can be taken from the estate.
- Testamentary Expenses: Costs of administering the estate.
- Priority Debts: Tax and NI arrears.
- Unsecured Debts: Credit cards, personal loans, utility bills.
Exceptions: When Family MUST Pay
Your family is only liable if:
- Joint Debts: They are named on the loan/mortgage/overdraft. The survivor becomes 100% liable for the whole debt.
- Guarantors: If they guaranteed a loan for you, they must continue paying it.
- Secured Assets: If they inherit a house with a mortgage and want to keep it, they must take over the mortgage.
Summary of Options
Check Life Insurance
Did the deceased have 'Death in Service' benefit from work? This typically pays out directly to a beneficiary, bypassing the estate and debts.
Use death Notification Service
A free service to notify multiple banks and insurers at once.
Don't Rush Payments
Executors should NOT pay any non-priority debts until they are sure the estate creates enough money for funeral and secured debts.
Common Questions
Can they take my wife's savings?
No. Your spouse's sole savings are theirs. Creditors can only claim from YOUR share of joint assets or your sole assets.
What happens to our joint mortgage?
The property (and the debt) usually passes to the survivor via 'Survivorship'. The survivor becomes solely responsible for the full mortgage payments.
Who pays for the funeral?
The Estate pays. If the accounts are frozen, most banks will release funds specifically to pay a funeral director's invoice directly.
Can I keep the car?
If the car is on finance (PCP/HP), the lender owns it. You can usually hand it back to clear the debt, or pay the settlement figure to keep it. If owned outright, it is an asset to be sold to pay debts.
What if I pay the credit card bill by mistake?
If you pay a debt you didn't have to, you might not get it back. Always check liability first before paying anything from your own pocket.
Official Sources & References
Related Situations
Other guides accurately explaining what happens next in money & debt .
What happens if I miss a Council Tax payment?
If you miss a payment, the council sends a reminder. If you don't pay within 7 days, you lose the right to pay by instalments and the full year becomes due.
What happens if I can't pay my bills?
Not all debts are equal. Some 'Priority Debts' can make you homeless or lead to prison, while others just affect your credit rating. If you are in calm, you must pay the Priority Debts first.
What happens if I can't pay my Car Finance (PCP)?
How to use 'Voluntary Termination' to return your car, clear the debt, and avoid damage charges.