Your debts do not die when you do. Although, depending on the type of debt you have and if it is shared with anyone else, no one in your family may be obligated to pay your debts. Many creditors are forced to take a loss on a debt when a customer dies.
The Facts
When you die, any debts that are in your name only are typically paid out of your estate. If you have no estate, your creditors may have to take a loss on your debts.
Types
Secured debts are backed by property. A secured creditor can reclaim this property upon your death. Unsecured debts provide a creditor no such claims to payment.
Time Frame
Depending on the state you live in, a creditor has a limited amount of time to place a claim against your estate for payment.
Considerations
Anyone who shares a joint account of any kind with you is responsible for the full amount of debt on the account if you die. This does not apply to authorized users on credit cards.
Effects
Creditors will often harass family members of the deceased to attempt to collect debts. They may lead the family to believe that they are responsible for making payments when they are not.
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