Money
Co-signers: what happens to a loan when someone dies
The co-signer usually still owes it.
Co-signing means agreeing to pay a loan if the main borrower doesn't. That promise usually stays in place after a death. If one person on the loan dies, the other is generally still responsible for the full balance.
Common situations
| Loan | If the borrower dies | If the co-signer dies |
|---|---|---|
| Car loan | Co-signer usually owes the rest | Borrower keeps paying as usual |
| Private student loan | Depends on the loan terms; some lenders release co-signers, some don't | Some contracts let the lender demand full repayment. Many lenders have dropped this, but no federal law requires it |
| Federal student loan | Discharged; no one owes it. Parent PLUS loans are also discharged if the student dies | Most federal loans don't use co-signers. PLUS loans can have an endorser, which works similarly |
| Credit card (joint account) | Other account holder owes the balance | Other account holder owes the balance |
Authorized users are different
Someone who's only an authorized user on a credit card usually doesn't owe the balance. The debt belongs to the account holder's estate.
What families find useful to know
- Every loan with a co-signer, and who it is
- The lender and account number
- Whether the loan has any death or disability coverage
Good to know
Debt collectors sometimes contact family members who don't owe anything. Under federal rules, relatives generally aren't responsible for a family member's debts unless they co-signed, were a joint account holder, or live in a community-property state where different rules can apply.