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Inheriting Debt

Debt is something that no one ever wants to deal with, but unfortunately, it’s something that many people must face. When someone dies, their estate is passed on to the beneficiaries listed in their will. This may include assets such as property and money, or it may consist of debts and other liabilities. If you’re a beneficiary of an estate with debt owed, you may wonder what happens now. Can the debt be inherited? What are your options? Here is what you need to know about inheriting debt. Let's start with the basics.

Facts Surrounding Debt

In most cases, when taking on a facility or loan, the person responsible is solely liable for the debt. This means that when they die, their estate must pay off the remaining balance before any assets can be passed on to their beneficiaries. Even if you’re a relative of the deceased, you’re not legally responsible for paying off their debts.

There are also collaterals associated with certain debts. If the debt is not paid, the lender can claim the collateral. Examples include homes and cars used to secure a loan or credit card debt.

Can Debt Be Inherited?

Inheriting debt is sometimes possible, depending on who you’re related to and how the debt was acquired. For example, if you’re a spouse or partner of the deceased, then the debt may be passed on to you. This can happen when debts such as joint mortgages and loans have been taken out in both names.

In addition, if you’re a child of the deceased, then certain types of debts — such as private student loans — may be passed on to you. In some cases, you may need to prove that the debt was incurred before your parent's death to have it discharged from their estate.

What Happens When a Parent Passes?

If your parent passes away and leaves behind unsecured debts (debts without collateral such as a house or car), those debts will be discharged from their estate. This means that creditors will not have a legal right to demand payment from you, their child.

However, if your parent has secured debts and you’re the beneficiary of their estate, the debts may be passed on to you. This may require you to pay off the remaining balance or surrender the collateral (such as a house or car) to satisfy the debt.

What Options Might You Have?

If you inherit unpaid debts, a few options are available. The first is to pay off the debt using the assets passed on to you. You may also attempt to negotiate with the lender for a settlement or repayment plan. This can help reduce the amount owed and make it easier for you to pay the debt in full.

If none of these options are feasible, bankruptcy may be your best option. Filing for bankruptcy will erase most types of debt and give you a fresh start. However, you should carefully consider this since it can seriously affect your credit score and financial future.


Inheriting debt can be a daunting experience, but with the right information and knowledge, you can easily navigate this process. Knowing the facts about the debt and your rights as a beneficiary of an estate can help you make the best decisions for your financial future. If you find yourself in this situation, it’s advisable to seek advice from a financial professional to help make informed choices.


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