Do my debts die with me?
Do my debts die with me?
Written by Eliza Elliott, Legacy Adviser at Octopus Legacy. Last updated: March 2026.
There are two common myths about what happens to your debts when you die:
- Your debt is automatically written off
- Your family members inherit all of your debt
Neither is true. The reality sits somewhere in between.
In England and Wales, debts aren't inherited by your family. Instead, they're paid from your estate — everything you own — after you die. If there's not enough in the estate to cover what's owed, most debts are simply written off. Your loved ones won't be chased for the shortfall.
But there are important exceptions. Joint debts, guaranteed debts, and certain household bills can fall to someone else. Understanding which debts do and don't pass on can save your family real stress during an already difficult time.
Who is responsible for your debts when you die?
Your personal representatives are responsible for managing your estate after you die. These are the executors named in your will, or administrators appointed by the court. Their role includes:
- Identifying and valuing all assets
- Notifying creditors
- Paying debts in the correct priority order
- Distributing what's left to beneficiaries
Executors aren't personally liable for your debts. They pay what's owed from the estate, not from their own pockets. However, they can be held responsible if they distribute the estate to beneficiaries before settling all known debts.
This is why many executors place a Section 27 notice under the Trustee Act 1925. This means advertising in The Gazette and a local newspaper if property is involved. Creditors then have at least two months to come forward with claims. Once that deadline passes, the executor is protected from liability for unknown debts.
What order are debts paid in?
When someone dies, their debts aren't paid on a first-come, first-served basis. There's a legal priority order. It's set out in the Administration of Insolvent Estates of Deceased Persons Order 1986.
| Priority | Debt type | Examples |
|---|---|---|
| 1 | Secured debts | Mortgages, secured loans |
| 2 | Funeral and testamentary expenses | Funeral costs, probate fees, solicitor fees |
| 3 | Preferential debts | Employee wages (if the deceased was an employer) |
| 4 | Unsecured debts | Credit cards, personal loans, utility bills, overdrafts |
| 5 | Interest on debts | Interest accrued since date of death |
| 6 | Deferred debts | Loans from the deceased's spouse or family |
All debts in one category must be settled before moving to the next. If the estate runs out of money partway through a category, the remaining creditors in that group share what's available proportionally.
If the estate can't cover all debts, it's considered insolvent. Creditors cannot recover the shortfall from the deceased's family.
What are the different kinds of debt?
Not all debts are treated the same way when someone dies. Here's what you need to know about each type.
Individual debt
A debt in one person's name only. This is the most straightforward type. Individual debts are paid from the deceased's estate by the executor. If the estate doesn't have enough to cover them, they're written off.
Common examples include personal credit cards, store cards, catalogue debts, and personal loans in the deceased's sole name.
Joint debt
A debt taken out by two or more people — for example, a joint mortgage or joint credit card. When one person dies, the full remaining balance passes to the surviving person. This happens automatically. The surviving debtor becomes responsible for the entire amount, not just "their half."
This is one of the most important debt types to understand, because it does pass directly to another person.
Guaranteed debt
When someone has acted as a guarantor, signing a promise to cover someone else's loan repayments if they can't make them, that obligation survives death. If the original borrower dies, the guarantor remains liable for the debt. If the guarantor dies, the guarantee may be enforced against their estate.
Secured debt
A loan taken out against a specific asset, most commonly a mortgage on a property. When the borrower dies, the asset can be sold to cover the debt.
How a mortgage is handled depends on how the property was owned:
- Joint tenancy: The property passes automatically to the surviving owner through the right of survivorship. The surviving owner takes on the full mortgage.
- Tenants in common: The deceased's share passes according to their will (or intestacy rules). The mortgage remains on the whole property, regardless of who inherits the share.
If a secured asset is sold and doesn't cover the full debt, the remaining balance becomes an unsecured debt against the estate.
Unsecured debt
A debt not tied to any specific asset. Credit cards, personal loans, overdrafts, medical bills, and utility bills all fall into this category. These are paid from the estate after secured debts and funeral expenses.
If the estate is insolvent, unsecured creditors may receive only partial payment, or nothing at all.
Household bills and council tax
If you lived with the person who died, you may be liable for ongoing household bills like gas, electricity, water, and council tax, not because you've inherited a debt, but because you're a resident of the property.
Council tax has specific rules. If the deceased lived alone and owned the property, it's usually exempt from council tax while it remains unoccupied and until probate is granted. After probate, a further six months' exemption may apply. If someone else lives at the property, they become responsible for council tax from the date of death.
Any council tax arrears from before the death are paid from the estate.
Undisclosed debts
A debt the deceased didn't tell anyone about. These are more common than most families expect. The executor is responsible for making reasonable efforts to identify all debts. Placing a Section 27 notice protects the executor if an unknown creditor comes forward after the estate has been distributed.
What happens to student loans when you die?
This is one of the clearest rules in UK debt law. Student loans are written off in full when the borrower dies. This applies to every repayment plan, Plan 1, Plan 2, Plan 4, Plan 5, and postgraduate loans.
The Student Loans Company cancels the entire outstanding balance. No repayment is required from the estate. No family member is liable. Unlike mortgages, credit cards, or personal loans, student loans don't become a claim against the deceased's estate at all.
To notify the Student Loans Company of a death, the executor or a family member needs to contact them directly with a copy of the death certificate.
Plan 5: what's changed?
Plan 5 is the newest repayment plan, applying to students who started undergraduate courses from August 2023. The first Plan 5 borrowers became liable for repayments from April 2026. The repayment threshold is £25,000 per year, and loans are written off after 40 years, the longest write-off period of any UK plan.
Crucially, Plan 5 loans are still written off on death, just like every other plan. The longer repayment window and lower threshold make no difference to the death rule.
What about pensions?
Pensions are treated differently from most other assets when someone dies.
Currently, unused pension pots don't form part of your estate for inheritance tax purposes. Your pension provider will pay out to your nominated beneficiaries. If you die before 75, your beneficiaries usually receive the pension pot tax-free. If you die after 75, they pay income tax on withdrawals at their marginal rate.
The 2027 pension change
From April 2027, unused pension funds and certain death benefits will count towards your estate's value for inheritance tax. This is a significant change. The government estimates around 10,500 estates will face an IHT liability where they previously wouldn't have, and approximately 38,500 estates will pay more IHT than before.
Pensions passing to a surviving spouse, civil partner, or registered charity will remain exempt.
If you have a significant pension pot, it's worth reviewing your estate plan before April 2027. Writing or updating your will can help ensure your wishes are clear and your family isn't caught off guard.
Which debts are written off when you die?
Here's a quick summary of what happens to each type of debt.
| Debt type | What happens when you die | Can it pass to someone else? |
|---|---|---|
| Individual debt (credit cards, personal loans) | Paid from your estate. Written off if estate is insolvent. | No |
| Joint debt (joint mortgage, joint credit card) | Full balance passes to the surviving joint debtor. | Yes — to the joint debtor |
| Guaranteed debt | The guarantor becomes liable for the full amount. | Yes, to the guarantor |
| Secured debt (mortgage in sole name) | Asset sold to cover debt. Shortfall becomes unsecured debt against the estate. | No (but the asset may be lost) |
| Unsecured debt (overdrafts, store cards) | Paid from estate after secured debts and funeral costs. Written off if insolvent. | No |
| Student loans | Written off in full. No claim against the estate. | No |
| Council tax arrears | Paid from the estate. Ongoing liability may fall to other residents. | Arrears: no. Ongoing: yes (to residents) |
| Household utility bills | Outstanding bills paid from estate. Ongoing bills fall to remaining residents. | Arrears: no. Ongoing: yes (to residents) |
| Pension debts | Pensions generally pass outside the estate to nominated beneficiaries. | No (pensions aren't debts) |
How to protect your family from debt after you die
There are practical steps you can take now to reduce the financial burden on your loved ones.
1. Write a will
A will makes it clear who should receive what from your estate. Without one, intestacy rules decide, and that can create delays, confusion, and extra costs during estate administration.
A will also lets you name executors you trust to handle your debts and distribute your estate properly.
2. Keep a record of your debts
One of the hardest things for executors is tracking down every debt. Make a list of all your debts — mortgages, loans, credit cards, subscriptions, buy-now-pay-later accounts — and keep it somewhere your executor can find it.
3. Review joint debts
If you have joint debts, make sure the other person knows they'll become fully responsible for the balance. This is especially important for joint mortgages.
4. Set up a lasting power of attorney
A lasting power of attorney lets someone you trust manage your finances if you lose capacity. Without one, your family may need to apply for a deputyship — which costs over £2,000 and takes much longer.
5. Consider life insurance
Life insurance provides a lump sum payment to your beneficiaries when you die. This could help cover debts like a mortgage or provide financial stability while the estate is being settled. It can be especially relevant for anyone with significant financial obligations, a joint mortgage, or dependants who rely on their income.
Find out more about life insurance through Octopus Legacy.
What happens if there's no estate?
If someone dies with debts but no assets — no property, no savings, no possessions of value — there's nothing for creditors to claim. The debts are written off. Family members are not responsible for paying them unless they were joint debts or the family member acted as guarantor.
Creditors may still contact the family, but they have no legal right to demand payment from anyone other than the estate. If you're being contacted about a deceased person's debts and you're not a joint debtor or guarantor, you can direct the creditor to the executor or seek free advice from National Debtline or Citizens Advice.
Debts in Scotland and Northern Ireland
The core principle is the same across the UK — debts aren't inherited by family members. But there are some differences in how estates are administered.
Scotland: The process is called confirmation (rather than probate). Scottish law also includes "legal rights" — a surviving spouse and children have a right to a share of the moveable estate (everything except land and buildings), regardless of what the will says. Debts are still paid from the estate before distribution.
Northern Ireland: The process follows similar principles to England and Wales but uses different forms and court procedures. Debts are paid from the estate in a similar priority order.
Do my debts die with me in the UK?
Most individual debts are paid from your estate after you die. If the estate doesn't have enough to cover them, they're written off. Your family won't inherit your debts unless they're joint debts or the family member acted as a guarantor.
Are family members responsible for a deceased person's debts?
No. Family members are not personally responsible for a deceased person's individual debts. Debts are paid from the estate. However, joint debts pass to the surviving joint debtor, and guarantors remain liable for guaranteed debts.
What happens to student loans when someone dies in the UK?
Student loans are written off in full when the borrower dies. This applies to all repayment plans including Plan 1, Plan 2, Plan 4, Plan 5, and postgraduate loans. No repayment is required from the estate or family members.
What happens to a joint mortgage when one person dies?
With joint tenancy, the property passes automatically to the surviving owner, who takes on the full mortgage. With tenants in common, the deceased's share passes according to their will, but the surviving co-owner remains responsible for the mortgage on the whole property.
What debts are written off when you die?
Individual debts like credit cards, personal loans, and overdrafts are written off if the estate can't cover them. Student loans are always written off on death regardless of the estate's value. Joint debts and guaranteed debts are not written off — they pass to the surviving joint debtor or guarantor.
Do I have to pay my deceased parent's debts?
No. You're not legally responsible for your parent's individual debts. Their debts are paid from their estate. If the estate doesn't have enough money, unpaid debts are written off. The only exceptions are if you were a joint debtor or acted as a guarantor.
What is a Section 27 notice and why does it matter?
A Section 27 notice under the Trustee Act 1925 is an advertisement placed in The Gazette and a local newspaper. It asks creditors to come forward within at least two months. It protects executors from personal liability if an unknown creditor appears after the estate has been distributed.
Will pensions be included in inheritance tax from 2027?
Yes. From April 2027, unused pension funds and certain death benefits will be included in the value of your estate for inheritance tax purposes. Pensions passing to a surviving spouse, civil partner, or registered charity will remain exempt.
This content is for general information only and doesn't constitute personal financial advice or a recommendation. Life insurance may not be suitable for everyone. Eligibility, underwriting and terms apply. Octopus Legacy Limited is an appointed representative of Richdale Brokers and Financial Services Ltd, authorised and regulated by the Financial Conduct Authority. Insurance is underwritten by Shepherds Friendly Society Limited, authorised and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.
