How to Manage Debts of Someone Who has Died

How to Manage debts of someone who has died

It can be challenging to manage debt of someone who has died in your family or close relative who has passed away as you would probably need to go through lots of paperwork. You can also seek help from a debt advice service if you do not feel confident in dealing with problems of debt of your family member, relative or a friend.

Click here to learn -> Debt Problems-What Creditor can do and can’t do

In this blog post, we are going to cover the following points to help you manage debt of someone who passed away from your family:

  • Check the paperwork and make a list of credit commitments.
  • Ways to pay off debt when someone dies.
  • How will a debt adviser help you?

Check the paperwork and make list of Credit Commitments

The first step to dealing with the debts of a partner or a family member who has died is to prepare a list of all creditors.

Go through the recent demand letters from creditors, and make a list of everything they owed.

Debt Solution – DMP

You would need to identify if there is any guarantor debt and inform them as the liability of the debt is to be borne by the guarantor.

In addition, you need to check if these debts are in their individual name or with a partner.

It is also important to check the nature of the debt liability – secured debt or unsecured debt.

Secured debt always has priority to be paid up and above unsecured debt.

Therefore, it is important for you to know what type of debt the deceased has.

There may be chances that you may not know a few debts, which your relative had.

To avoid this problem, you can advertise in a local newspaper before you start arranging to pay the debts. This gives the deceased’s creditors time to come forward with their claims.

If you do not do this, you could find yourself years later having to deal with a creditor claiming on the estate.

This is the best practice you can adopt if you want to manage debt of a deceased person – just collect as much information as possible.

How to Manage debts of someone who has died

What if I ignore creditor phone calls?

Some people find it quicker and easier to deal with creditors by phone, but for many people it can be stressful, upsetting or inconvenient.

A creditor cannot insist on you dealing with them by phone and you will not get into any trouble if you refuse.

When you prefer not to take phone calls from your creditors, it becomes even more important that you read your letters and emails as soon as you get them.

Again, we are reaffirming – do not give them a wrong indication that you do not pay your debts intentionally.

Ways to pay off outstanding debts after a death

Step 1: Firstly, Inform creditors that the person has died

Your relative’s creditors do not know the current situation and they can increase the debt enforcement actions for recovery of the debt if repayment is missed.

So, contact the creditors in writing and let them know that the person has died and you are now going through the legal process of dealing with the deceased person’s estate.

Tell them that you are going through the legal process of dealing with the person’s estate.

If it is a joint debt, Creditors will ask another account holder to pay the debt, so contact a suitable debt advisor for further help in arranging monthly payment as per his/her affordability and a suitable debt plan must be chosen.

Step 2: Insurance policy/ies can help in paying off debt

Another way to manage debt of the deceased without burdening your finances is – Insurance. It is worth it to check if there is any insurance policy in the deceased name. Insurance policies are helpful in the event of unemployment, sickness and death events.

For example, a life insurance to pay off the mortgage in case of death.

Alternatively, Mortgage protection policy to pay off the mortgage debt if you die.

Alternatively, a PPI policy to pay out lumpsum towards credit cards and unsecured loans debt.

You should do this no matter if there is secured or unsecured debt, as it would surely keep the diseased financial burden off from leftover estate.

You must contact the insurance company for lodging the claim.

If there is no insurance policy

You will need to contact the creditors to arrange to pay off the debts if they have not already made a claim on the estate.

For joint debts:

  • Ask your creditor to supply you loan agreement copy to see your joint liability
  • Ask your creditor to take out your deceased partner’s name from the account and transfer it in your sole name
  • If you cannot afford to pay each instalment in full, find a suitable debt advisor for help.

For individual debts:

  • Ask for a statement or letter showing the outstanding balance of the debt
  • Give them the name and contact details of the executor or administrator of the deceased’s estate. They are responsible for making sure that the debt is paid from the estate.
  • If you’re the administrator of the estate, you’ll need to have probate or a grant of administration
  • The executor will also pay the debts off in priority order.

Step 3: Pay in priority order

Once you have probate or grant of administration, you can use the money in the estate to pay off the debts that are not covered by insurance.

Paying the debts first is more important than distributing the estate to the heirs.

You should pay off the debts in this order of importance:

  • Secured debts, such as the mortgage
  • Reasonable funeral costs and the costs of administering the estate
  • Unsecured debts, such as credit cards, utility bills, unpaid rent, Council Tax and other taxes, and repayment of overpaid benefits.

If there are assets, such as a car or a house that if sold, could go towards paying off the debts, it is an option worth considering.

If there are more debts than the estate can pay back, this is called an insolvent estate.

In this situation, it is best to seek the advice of a solicitor or a probate specialist.

What should you do if you are struggling to pay off debts after the death of your partner?

If you are struggling to pay off joint debts after your partner dies, or if the drop in income makes it hard to pay your own debts, it can be hard to know where to turn. And it can be hard not only to pay off the debt, but also manage debt altogether.

It is important to know you do not need to struggle alone with your debt worries.

If you are in debt and would like advice or help, please get in touch. We offer free and confidential debt appointments and our advisers are happy to assist you in your difficult time.

You will depend on your personal circumstances.

It is always best to talk things through with an experienced debt adviser for help and support in dealing with debts.

How will a debt adviser help you?

A debt adviser will support in:

Repayment Arrears and Debt Collection

  • Obtaining client permission for debt review
  • Assessing the extent of the client’s debt burden
  • Providing options for an agreement of settlement with creditors
  • Negotiating suitable terms with creditors
  • Ensuring that client’s stick to their debt payment terms
  • Assessment and review a client’s debt burden
  • Assistance in drawing up a settlement plan acceptable to creditors
  • To manage and ensure that payments are made regularly and timeously as per the agreement reached with creditors
  • Check you have applied for all the benefits and entitlements available to you.

You can contact our debt advisers in a way that is best for you:

  • Online
  • Face-to-face
  • Over the phone.


Rajnish Tyagi is an experienced and Cert DR qualified debt adviser at Acme Credit Consultants Ltd. He specializes in offering suitable debt solutions to clients. He can be contacted at raj@acmecredit.co.uk or website: www.acmecredit.co.uk