What Happens to Debt When You Die? - Experian (2024)

FAQs

What Happens to Debt When You Die? - Experian? ›

Whether it's a mortgage, a car loan or a credit card bill, some people die still owing debts. But what happens to your debt when you die? Any debt that remains after someone dies will either be paid from their estate, paid by a cosigner or left unpaid if there are insufficient funds.

When someone dies, their debts are generally paid out of the money or property left in the estate. If the estate can't pay it and there's no one who shared responsibility for the debt, it may go unpaid. Generally, when a person dies, their money and property will go towards repaying their debt.

Credit card debt doesn't follow you to the grave. Rather, after death, it lives on and is either paid off through estate assets or becomes the responsibility of a joint account holder or cosigner.

Here's how to report a death to each credit reporting agency: Experian: Mail a copy of the death certificate to Experian's Consumer Assistance Center, P.O. Box 4500, Allen, TX 75013, or upload it online.

Additional examples of unsecured debt include medical debt and most types of credit card debt. If you die with unsecured debt, repayment becomes the responsibility of your estate. Your legal estate refers to all the assets, property and money left behind by you or another deceased person when they die.

Similarly, creditors do not have the right to go after the assets of parents, children (for instance, child support), siblings, or any other family members.

When a person dies, creditors can hold their estate and/or trust responsible for paying their outstanding debts. Similarly, creditors may be able to collect payment for the outstanding debts of beneficiaries from the distributions they receive from the trustee or executor/administrator.

It's important to remember that credit card debt does not automatically go away when someone dies. It must be paid by the estate or the co-signers on the account.

After someone has passed, their estate is responsible for paying off any debts owed, including those from credit cards. Relatives typically aren't responsible for using their own money to pay off credit card debt after death.

While credit and debit cards make purchasing things much more convenient, they're also tied to the accounts and identities of the persons they're registered with. This means it's illegal to use the payment card of another person.

Do I need to notify Experian of a death? ›

Now, it's time to talk about how to notify credit bureaus of a death. The three credit bureaus you'll want to notify are: TransUnion, Equifax, and Experian. You'll want to repeat the following instruction steps for each respective agency: Obtain the death certificate.

Lender and creditor contact information can be found on the credit reports. You may be required to provide a copy of the person's death certificate and other legal documents. A joint account may remain open even after one of the people has died.

If identity theft is a stated concern, Experian will add a security alert after the file has been changed to reflect the person as deceased. If there are additional concerns, Experian will add a general statement to the file at the direction of the spouse/executor.

Statistically speaking, almost three out of four people are going to die with debt, which raises a very real concern for spouses and children of the deceased: Can you inherit their debt? Good news: In nearly all circ*mstances, you won't! The deceased's estate is responsible for settling most, if not all, debts.

Typically, heirs are not held responsible for a deceased person's medical debt, unless they have explicitly agreed to assume responsibility, or if the spouse resides in a community property state. In community property states, the spouse might be liable for half of the medical debt accrued during the marriage.

You are generally not responsible for someone else's debt. When someone dies with an unpaid debt, if the debt needs to be paid, it should be paid from any money or property they left behind according to state law. This is called their estate.

The executor — the person named in a will to carry out what it says after the person's death — is responsible for settling the deceased person's debts. If there's no will, the court may appoint an administrator, personal representative, or universal successor and give them the power to settle the affairs of the estate.

You do not have to take responsibility for debts owed by a deceased person. You do not need to pay their debt, unless one of the situations below describes you: You are a co-signer on the person's loan. You are a joint account holder on a credit card (not just an “authorized user” on the account)

California law does allow creditors to pursue a decedent's potentially inheritable assets. In the event an estate does not possess or contain adequate assets to fulfill a valid creditor claim, creditors can look to assets in which heirs might possess interest, if: The assets are joint accounts.

You are not responsible for your parents' debt. This is true regardless of whether you inherit assets under their estate. However, a parent's estate must settle any debts before you can inherit. And children often share financial responsibilities with aging parents, often medical and housing costs.