Death & Debt

People sometimes mistakenly believe that their debt will die when they do. Unfortunately, this is often not the case, as a death can leave the deceased person's loved ones saddled with the unpaid debts. Understanding what debt can survive debt and who inherits it can help you plan accordingly for the future, ensuring that your debts don't haunt your loved ones from beyond the grave.

Credit Cards

Credit card companies often write off debt owed by someone who has passed away. However, in some cases, a credit card company may try to get paid by collecting from the person's estate. This means that items that would otherwise have been inherited by children of the deceased will instead be sold to pay off the credit card debt. Plus, the credit card company gets first dibs on any money willed to family members. In cases where credit cards were jointly held, however, the debt passes on to the other person on the account.

Loans

Private loan companies can go after a deceased person's estate to try to satisfy the debt during the probate process. Loans taken out with a cosigner, however, become the sole responsibility of the survivor, if there is one. In community property states such as Wisconsin, Washington and Texas, all assets -- and debts -- are considered joint property, even if the debt was taken out before two people got married. So even if you did not cosign on a loan for your spouse but you live in a community property state, you inherit the debt.

Educational Debt

While a surviving spouse could seek relief from joint debt and those inherited in community states by filing for bankruptcy, educational debt is a completely different animal. Student loans backed by the government are nearly impossible to have discharged in bankruptcy, so if your now-deceased spouse owned $100,000 in student loans, you may now be responsible for paying that back.

Fraudulent Collection

You may not be liable for certain debts of loved one. For instance, if an elderly parent died and had no estate to satisfy the debt, the company owed the debt must simply write it off as a loss. However, many companies sell such debts to collection companies that will try to collect the debt from family members, even though they have no legal standing to do so. Know your rights and don't let yourself be bullied by debt collectors.