Debt doesn't simply disappear when you die. But that doesn't necessarily mean someone else has to find a way to pay all off your debts. Creditors can collect what is owed from your estate. ... If you have a co-signer on a loan or line of credit, the co-signer will be responsible for paying the debt after you die.
As a rule, those debts are paid from the deceased person's estate. According to the Federal Trade Commission (FTC), the nation's consumer protection agency, family members typically are not obligated to pay the debts of a deceased relative from their own assets.
Some lenders of private student loans forgive the debt upon death, including Sallie Mae and Wells Fargo. All federal student loans are discharged upon your death. If a student's parent has a federal PLUS loan, it's discharged upon the death of either the parent or student.
Generally, the deceased person's estate is responsible for paying any unpaid debts. The estate's finances are handled by the personal representative, executor, or administrator. That person pays any debts from the money in the estate, not from their own money.
Bills Are Paid Before Heirs Get Money
The law requires the estate to pay the deceased person's bills before distributing money to heirs. ... But if the account doesn't have enough money to pay off your mother's creditors, you're not responsible for any unpaid balances—unless one of the above exceptions applies.
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