What Happens to Debt When You Die?
Debt doesn't just end when you die. In fact, it could affect your loved ones after you're gone. Here we explain what you can do about it.
In this article, we'll cover:
‘What happens to debt when you die’ is an excellent if slightly morbid question. Many of us probably have images of a Dickensian situation occurring where children now must work off the debts of their parents.
Fortunately, it isn’t anything like that. Still, the amount you owe could affect how much your loved ones receive in terms of inheritance. To find out more, read on.
Does debt die with you?
Joint debts and guarantors
If a guarantor was named on an account of the deceased, then that individual would now likely be responsible for any sums owed. In a similar fashion, where joint debts are involved, the other person named on the account should now be accountable for these.
Of course, there are exceptions to the rule – and providers are often happy to renegotiate in the event of someone’s death.
Why debt should be resolved before death
According to Age UK, about 20% of people over 60 owe money on debts such as mortgages, credit cards, and loans. Research has also previously shown that older people are less likely than younger individuals to seek debt advice. However, as we get older, it’s advisable to resolve any ‘loose ends’ so our loved ones don’t end up being affected.
In a way, debt ceases to become a problem after you die. However, any outstanding sums could directly affect how much your loved ones receive in terms of inheritance. Perhaps the last thing anyone wants is a creditor getting a share of your assets when you pass.
Before we die, it’s a great idea to ensure all business is resolved – this includes debts. It’ll also stop family members from receiving any nasty surprises and discovering you’re in a worse financial situation than you may have let on.
Although there are many possible solutions out there, a debt consolidation loan – even if you have bad credit – could be one way to quickly deal with your creditors.
To find out more information, get in touch today. We’re just at the end of the line!
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Unsecured Loan Representative 69.9% APR
Borrowing £7,500 over 36 months, repaying £502 per month, total repayable £18,083. Total cost of credit £10,583. Interest rate 69.9% (variable). The lenders on our panel offer loans for 12-60 months, with rates from 5.8% APR to 89.9% APR. The Representative Example is based on all loans paid out by lenders between 19th Apr 2022 and 23rd Dec 2022.
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If you choose to add fees to the loan: Assumed borrowing of £25,000 over 120 months, plus a broker fee of £2,500 and a lender fee of £250 would result in monthly repayments of £345.55, the borrowing rate is 8.6% (variable), the APRC is 11.7% (variable), total charge for credit £16,466.00 and the total amount payable £41,466.00. You can opt to pay the lender and/or broker fees upfront, your adviser will discuss these options with you.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any debt secured on it. All rates vary subject to loan amount, loan type and status. Repaying your debt over a longer period of time may increase the amount you pay.
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