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Can you inherit debt? Here’s what to know

After a loved one dies, you can inherit assets like their home. But unfortunately, under certain circumstances, you can inherit their debt, too

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Receiving an inheritance is usually a good thing — you might receive money, property, and sentimental items that remind you of your loved one, like their favorite watch or jewelry.

But sometimes, it’s not a good thing at all. That’s because it’s possible to inherit debt after someone’s death. Below, we’ll cover everything you need to know about what kinds of debt you can and cannot inherit.

In this article:

What kinds of debt can be inherited?

What happens to debt when someone dies depends on several factors, including the type of loan involved, the terms of the loan, and whether the estate can cover it.

The truth is, it’s quite difficult to inherit debt unless you cosigned it or are a primary account holder. In a perfect scenario, your loved one’s estate would cover any debts they didn’t pay off before they passed. But when the deceased person’s estate can’t cover their debts, the remaining balance often remains unpaid.

This isn’t always the case, however, and you can sometimes inherit their debt after they’ve died. Here are some of the most common types of debt you can inherit:

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What kinds of debt cannot be inherited?

There are many types of debt that cannot be inherited. For example:

But these laws are inconsistently enforced, and if your loved one’s estate isn’t large enough to cover healthcare costs, creditors usually forgive what’s left. If you didn’t cosign any medical bills, then the only way you would likely be responsible is if you’re the surviving spouse and live in a community property state.

For example, you must make the mortgage payments on a home you inherited and wish to own. If you cannot afford to make the payments, you may have to sell the house or rent it out to cover the monthly payments. Otherwise, the creditors may seize the security to repay the outstanding loan.

If multiple beneficiaries have a right to a portion of the home — either as stated in the will or as appointed by an administrator if there’s no will — the person who wants to keep the property can buy out the others with cash, or everyone can jointly choose to share or sell the home.

How to deal with debt when someone dies

Figuring out what to do with the finances of a loved one after their passing can be a complex process. Here are four steps to take when dealing with their debt:

1. Find out who the estate executor or administrator is

The estate executor is the person responsible for carrying out the last wishes of the deceased person. This person is appointed by name in the will and is often a spouse, parent, or child of the former owner of the estate. It could also be a lawyer or another professional closely acquainted with the person’s finances.

An administrator, on the other hand, is a person appointed by the court to distribute the estate if the deceased didn’t appoint anyone in their will — or doesn’t have one.

Your first order of business should be to find out who the administrator or executor is, as they are responsible for distributing all the assets in the estate as well as settling all the debts. If that person is you, you’ll be the one who must deal with creditors.

2. Look at the deceased’s outstanding loans

The executor should identify all of your loved one’s outstanding debts and look at the terms and conditions to identify any cosigners. They should also notify any creditors of their passing by sending a death certificate.

3. Know what to do when debt collectors call

Debt collectors may give you a call, but that doesn’t mean that you’re responsible for repaying any debt. According to the Fair Debt Collection Practices Act (FDCPA), a debt collector is only allowed to contact you to ask who the estate executor or administrator is. However, they cannot threaten you, harass you, or ask you to pay for any debts that you’re not responsible for. If a debt collector bothers you repeatedly, you may submit a complaint to the Consumer Finance Protection Bureau.

4. Consider hiring a lawyer

Finally, you should think about hiring an estate lawyer to help you deal with your loved one’s finances. While a well-executed will could resolve any outstanding debts very easily, not every estate is as straightforward. Some estates may need to settle multiple debts and go to probate court, which will require a skilled attorney.

Debt and life insurance

If you’ve inherited debt, you might think life insurance is no longer affordable, and cannot fit into your current financial picture. But term life insurance is designed to be affordable, and it can help provide financial protection for your loved ones in case you die.

For example, a 30-year-old woman in excellent health can get a 20-year, $500,000 Haven Term life insurance policy for $15.16 per month. This coverage provides a half-million dollars to your designated beneficiary if you die during the term, and this money can pay down any inherited debts, as well as go toward end-of-life expenses, food and housing, tuition and more.

These are all things your loved ones would have to pay for in the event that you die, and they would be doing so without your income to help cover these expenses. So the real question becomes not whether you can afford to get life insurance, but whether you can afford not to.

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About Marco Monroy Robles

Read more by Marco Monroy Robles

Our editorial policy

Haven Life is a customer-centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.

Our editorial policy

Haven Life is a customer centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.

Our content is created for educational purposes only. Haven Life does not endorse the companies, products, services or strategies discussed here, but we hope they can make your life a little less hard if they are a fit for your situation.

Haven Life is not authorized to give tax, legal or investment advice. This material is not intended to provide, and should not be relied on for tax, legal, or investment advice. Individuals are encouraged to seed advice from their own tax or legal counsel.

Our disclosures

Haven Term is a Term Life Insurance Policy (DTC and ICC17DTC in certain states, including NC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111-0001 and offered exclusively through Haven Life Insurance Agency, LLC. In NY, Haven Term is DTC-NY 1017. In CA, Haven Term is DTC-CA 042017. Haven Term Simplified is a Simplified Issue Term Life Insurance Policy (ICC19PCM-SI 0819 in certain states, including NC) issued by the C.M. Life Insurance Company, Enfield, CT 06082. Policy and rider form numbers and features may vary by state and may not be available in all states. Our Agency license number in California is OK71922 and in Arkansas 100139527.

MassMutual is rated by A.M. Best Company as A++ (Superior; Top category of 15). The rating is as of Aril 1, 2020 and is subject to change. MassMutual has received different ratings from other rating agencies.

Haven Life Plus (Plus) is the marketing name for the Plus rider, which is included as part of the Haven Term policy and offers access to additional services and benefits at no cost or at a discount. The rider is not available in every state and is subject to change at any time. Neither Haven Life nor MassMutual are responsible for the provision of the benefits and services made accessible under the Plus Rider, which are provided by third party vendors (partners). For more information about Haven Life Plus, please visit:

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