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Dealing with debts after a death. The financial impact of loss

There is no way to prepare for the death of someone you love. It impacts every part of your life.

Loss creates a lot of confusion, especially around debts or assets. It can be hard to make choices you feel good about.

Our debt advice can offer support.

Asking for help can be hard.

Are debts causing you stress? Do you feel you never have the time?

Whatever the barrier, let’s deal with it together.

Find out more here.

Are you struggling with debt after the death of a loved one?

Money worries?

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Unsecured debts and death

Unsecured debts are things like loans and credit cards.

What happens to these debts after someone dies depends on:

  • Whether they had any assets like:
  • Investments
  • Savings
  • A house

The debts were in their name only

Debts only in the name of the person who passed are either:

  • Written off if the person did not have any assets, or
  • Repaid if the person left an estate
  • This could be anything from savings to a share in a house

You are not responsible for a debt only in the name of your husband, wife or civil partner.

People only receive an inheritance after funeral costs and debts are paid.

The debts were joint with you or someone else

The other person on a joint credit agreement is responsible for the debt when someone dies.

A credit card is only ever in one name. But they may let you have a second card for your partner or someone else to use.

Someone else with their name on the card is a 'second card holder'.

The second card holder is not responsible for paying the debt on either card.

Was your loved one on a DMP?

A debt management plan (DMP) is a way to pay back debts by making affordable monthly payments.

The best thing to do when someone passes while on a DMP is to:

  • Call their DMP provider
  • Tell them what has happened

They may ask for details from the death certificate, so it is best to have this to hand.

Contact us about a StepChange DMP client here.

A few points to remember about Bereavement and Money

This can be a confusing time. Here are the most important things to know:

1. Tell the people they owe

  • Write a letter explaining what happened
  • Tell them you will be in touch later to find out what else needs doing
  • They are normally understanding

2. A person's estate can be complicated

It includes:

  • Any money they have in bank accounts
  • Any savings
  • Any assets like:
  • Cars
  • Caravans
  • Antiques
  • Jewellery
  • Any property they own
  • This could be a house in their name or jointly owned

3. Check if their debts are covered

This could be by:

  • A life assurance policy
  • Which might repay a mortgage
  • Personal protection insurance
  • Which might cover loans or credit cards
  • A 'death in service' payment
  • From a pension or employer
  • This provides a lump sum of money

How is a deceased person's estate handled?

A person’s estate is made up of:

  • Their money
  • Including any insurance pay outs
  • Investments
  • Any property they own
  • Or jointly own
  • Their possessions

The money in their estate covers:

  • Funeral and administration costs first
  • Debts next

The people you owe can ask for the house to be sold if:

  • Money is tied up in it
  • The money could repay debts

You need to come to an arrangement with them if you do not want to sell the house.

Unsecured debts are normally written off if there is little or no money left when a person dies.

A personal representative may become responsible for debts if they do not handle the estate properly.

Here are some other sites you might find useful

Cruse Bereavement Care

Cruse offer specialist phone, email and face to face support for children and adults who are dealing with loss.

Their website also has information on local support services in your area.

Age UK

Age UK can advise on the steps to take when someone dies, including:

  • Finding help with funeral costs and
  • Dealing with estates

Bereavement Advice Centre

The Bereavement Advice Centre offers practical help after loss.

Free and confidential debt advice whenever you are ready

You are not alone.

We have helped thousands of people over the last 30 years to deal with debts.

We will do all we can to support you.

Take two minutes to answer a few simple questions, so we can find the right help for you.