After a loss

What happens to debt when someone dies

Debt usually stays with the estate, not the family.

One of the most common worries after a death is whether the family has to pay the person's debts. In most cases they don't personally owe them. Debts are paid from the estate, the money and property the person left.

How it usually works

• The executor uses estate money to pay valid debts before anything goes to heirs.
• If the estate runs out of money, most remaining debts usually go unpaid.
• State law sets the order debts are paid in. Funeral costs, estate expenses and taxes usually come first.

When someone else may owe it

• They co-signed the loan or were a joint account holder
• They live in a community-property state, where a spouse may be responsible for some debts
• State law makes a spouse responsible for certain debts, such as some medical bills

What usually doesn't go to creditors

Life insurance and retirement accounts paid to a named beneficiary usually aren't part of the estate, so creditors generally can't claim them.

Debt collectors

Collectors can contact the executor. Under federal rules, they can't say or suggest that family members are personally responsible when they aren't. Families can report problems to the Consumer Financial Protection Bureau.