This is something that is asked in the financial space a great amount upon the debt of an individual’s loved one.

So what’s the answer?

A sole debtor

If the debt is in the name of the deceased only, the debt will not be owed by anyone else.

Upon the death of someone who has a debt or a multitude of debts, the person appointed as their Legal Representative may be contacted to see if the deceased has any assets in their estate. Should there be any assets, whether it be in a joint or sole estate, the debt becomes a liability on the estate.

If there is not enough money to pay the total debt off, then whatever is available in the estate will be taken and once the money has run out, the rest of the debt will likely be written off.

Assets in the estate can include property, land, any money in bank accounts or any possessions belonging to the deceased.

Joint debtors

Where a debt is in the name of the deceased and another person, the surviving debtor will usually be responsible for the remaining debt.

This is due to most joint debts being held on a joint and several liability basis, meaning that each debtor is liable for the entire debt, not simply their share of it.

Priority of debts

In the UK, debts are paid in a specific order when it comes to the death of an individuals.

Secured creditors like mortgage and loan providers, funeral and administration expenses, and preferential debts have the highest priority – these will be the first to come out of the estate.

After this, the rest of the estate can be used to pay off unsecured debts, like credit cards, medical bills or utility bills.

Insolvent Estates

If the deceased person’s estate is insolvent, it means that there are not enough assets to cover the outstanding debts. The estate will therefore be distributed in a specific order (as explained above) until the assets runs out.

After this, it is likely that the remaining outstanding balances will be written off.

Professional Advice

During a period that is likely to come as a mental strain, it is essential that you seek professional advice before carrying out anything on behalf of a deceased individual.

Deceased debts can be extremely complex, so we would recommend seeking advice from a solicitor or financial advisor who can guide you through the difficult process.

Disclaimer: The information provided in this article represents the opinions and insights of Scott & Mears. It is intended for informational purposes only and should not be considered as professional financial or legal advice. Business owners and individuals seeking financial guidance should consult with qualified professionals to address their specific financial needs and circumstances. Scott & Mears disclaims any liability for decisions made based on the content of this article.

Published on 2nd April 2024