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Debt and death
Former Member
Posts: 1,876,323 The Mix Honorary Guru
If you are in debt when you die what happens to it? Does it get written off? I know student loans do but I'm also wondering about overdrafts and other loans.
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It does say that any debts you leave can be recovered from any assets you leave though.
If you thought you were going to die soon you could take out loads of credit, but also credit protection if you get sick or die. But if you take that out knowing you are sick then its invalid, and if you top yourself its invalid too.
Exactly, inheritance tax starts at about £250K so its really only of concern if you have a house and/or assets of high value.
In February, someone I knew died, and although he didn't own a house (had only moved back here when he was ill, and lived with parents - rented a flat before I think), he had a 05 plate Audi TT that had racked up a rather large amount of debt when he bought that brand new... and about £20,000 worth of debt from other means (this is including student loans he hadn't finished paying though)
When he died, his car debt was written off (the bit he hadn't paid while in hospital) and the car was taken away. A fraction of his loans were written off (such as his student loan, as you said), but the rest was left to his mum and dad to pay. Luckily, his life insurance/SSP he'd been getting that he hardly touched/work pension that they claimed covered a large chunk of it, and I think they've nearly paid the rest now.
A lot of people when they get old do have a house though... but yea :thumb:.
At least you don't have to worry about who gets what then, you can divvy it up fairly. That would be cool.
If you die in debt, then the debt is transferred to your estate. If your estate is smaller than the debt then that's the end of it, your family is not responsible. But creditors will harrass grieving families to try and extract the debt, and as so many people don't understand the law they cough up. Debt Collectors are all liars, folks.
Creditors can, of course, seek an enforced sale of your property to release equity, if all your estate's wealth is tied up in the family home. That could result in your partner being booted out of your house, or them having to buy your share of the house in order to pay the creditors.