Debt After a Death

Debt and Bereavement

This difficult topic has many facets that need to be considered if we are to have a fuller understanding of the role that death plays in debt accumulation. Below, you will find some facts and potentially helpful information to assist you in understand how death affects debt situations and vice versa.

Debt can occur as the result of:

Being incurred because of the bereavement of a loved one

The death of a partner

A death in the family

Many people do not have the funds they need to pay for funeral expenses because they did not know that the average funeral costs more than £1,000. As a result, they turn to credit and end up in debt.

It is important to understand that most funerals must be paid for before inheritance can be paid out from a will.

After a death, you would be wise to ask yourself the following questions:

- Is there a hidden stash of cash that can be used to cover funeral costs that your loved one arranged in advance?

- Was a prepaid funeral plan arranged prior to their death in order to cover funeral expenses?

- Can you locate a cremation society certificate to help cover costs?

- Did your loved one have cleared funds set aside to cover funeral costs?

- Did your loved one pay money into a special savings plan to cover funeral expenses?

Some people will opt to arrange a simple funeral in order to avoid going into debt after a death.

You need to be aware that a simple or basic funeral is comprised of:

Making all required disbursements

Making all required funeral arrangements and providing expert advice

Removing the deceased to a resting place that is suitable and allowing 10 running miles within typical working hours

Providing a simple coffin, often veneered and transportation via hearse to a crematorium or cemetery

Providing all needed staff as well as a funeral director

Many people wonder about debt after death and are worried about the possibility of a deceased person passing on debts to surviving family members or other people related to the deceased. Children, especially, fear that they may inherit their parents’ debts after they have passed away. Older people and their family’s obligation in paying their debts after death is a delicate topic so insufficient communication among family members can increase the fear that the person’s debt could be the responsibility of surviving family members after the older person is deceased.

There are certain situations in which surviving relatives or third parties can be held responsible for debt after a death and they are as follows:

- When a third party is guarantor of debts to a person now deceased, the full liability will rest on the surviving guarantor

- Debts must be paid from the estate of the a deceased person

- If a debt is a joint debt, the surviving part must assume full liability to pay that debt off

In any of these cases, debt can be unexpected and even frightening, beyond being simply distressing. If you find yourself needing to seek solutions to handle you debt, you may wish to investigate a Debt Management Plan if the debt is small or an Individual Voluntary Agreement (IVA) if the debt is thousands of pounds. You owe it to yourself to get your peace of mind back by finding a debt solution that will help you resume your former way of life.