Are you responsible for your parent’s debt?
No, you can’t inherit a parent’s debt
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Losing a mom or dad is hard enough without the worry of their debt. This is a common concern when parents pass away with an unpaid mortgage, auto loan or personal loan. However, there is no need to worry — you cannot inherit your parent’s debt after they die. A deceased person’s debts are typically taken from their estate. If the estate is insufficient to satisfy the debt, those debts could go unpaid.
You are not responsible for a parent’s debt after they die unless you are a co-signer on their debt.
Jump to insightThe estate executor will use the estate’s assets to settle all debts, and the remainder is distributed between the heirs.
Jump to insightIt is illegal for your parent’s creditors to contact you and try to solicit payment directly from you.
Jump to insightHow debts are handled after a parent's death
When your parent passes away, all debts are settled by their estate. Any loans they may have, such as a mortgage or personal loan, will be deducted from the estate.
Typically, the administrator or executor of the estate will handle payment to creditors, settling all debts and liabilities. This may be done by selling off assets, such as selling a house to pay off a mortgage. If there is not enough in the estate to pay off all debt, those debts generally go unpaid.
After all debts have been settled, any leftover assets or funds typically go to the spouse. However, laws vary by state and can depend on marital status. The surviving spouse will still be responsible for any joint debts, such as a joint credit card or co-signing a personal loan.
Legal responsibility for parental debt
You are not responsible for a parent’s debt — the only person responsible for unilateral debt is the person or people who took out the loan. However, if you are a co-signer or co-borrower, you will be responsible for the remainder of the loan, even if your parent passes away.
When you are responsible for a parent’s debt
In some states, the law dictates that a surviving spouse must resolve their partner’s outstanding debt. This does not affect you as the child. However, there are some cases when children may be responsible for a deceased parent’s debt:
- You are the co-signer on a loan with your parent.
- You are a joint account holder.
- You are the executor in a state that requires you to pay certain debts for property jointly owned by spouses.
Estate debt
Estate debt is debt that is left over when your parent dies. Before assets can be passed to heirs, the executor must resolve all outstanding debts. Assets such as a home may be sold to settle all debts, and whatever is left over is then distributed to the heirs.
This presents a problem if you intended to inherit a property but your parents had an outstanding debt. In order to keep the property, you may have to take over the mortgage or resolve any other outstanding debts that may apply.
Joint debt
Joint debt is handled differently. If you are the co-signer on a mortgage, car loan, credit card or other type of loan with your parent, you will be held responsible for the balance owed after your parent dies. Any payments due become your responsibility as the co-signer.
In some cases, there may be exceptions where the estate can pay off the debt for you. However, you will be held accountable for the debt if it does not. An estate lawyer can help provide more information about how to handle your parent’s debt or possibly dispute the debt.
Protecting yourself from parental debt
When your parent passes away, it is critical that you act quickly. Take the time to review all debts and contact a lawyer for personalized advice.
Review all debts
Make sure to get a copy of all outstanding debts that your parent held and review them carefully. Debt collectors are required to give you a validation notice that provides details about the debt. This must be disclosed within five days of the first communication.
If a creditor refuses to disclose this information or seems like a scam, contact the Federal Trade Commission (FTC) or Consumer Financial Protection Bureau (CFPB) to file a complaint.
Work with a lawyer
A lawyer can best advise on exact procedures and applicable state laws that may impact your parent’s estate. The American Bar Association provides a free database to help you find a lawyer experienced in estate and probate requirements. Some legal aid offices may help you cover the costs of an attorney.
You can also get help based on specific requirements. For example, servicemembers are encouraged to contact their Judge Advocate General (JAG) office for support, and the Eldercare Locator helps provide legal aid for older adults.
Understanding debt collection practices
Creditors may contact you to resolve your late parent’s debt. However, federal law limits what they can do. Debt collectors may not harass you, even if you are an heir. They also cannot lead you to believe you are responsible for a debt.
If you are the executor of the estate, they may contact you about the estate. Still, you yourself are not responsible for resolving the debt. If a creditor attempts to collect your parent’s debt directly from you, do not pay it unless you are a co-signer. Otherwise, it is an illegal practice, and you should file a complaint with the CFPB.
How to handle debt you are responsible for
If you are responsible for a debt, first talk to the executor of the estate to obtain more information about the debt. You can also talk to a creditor or get a free credit report for your parent to determine what debts are left over. The executor of the estate can then help you ascertain which debts you are really on the hook for.
You can contact a debt relief company if you have trouble paying any outstanding debts. They can help you with a debt management plan, which consolidates your debts to make your monthly payments more manageable. They can also negotiate a lower balance with your creditor or charge-off your debt so it is dismissed entirely, depending on the circumstances.
FAQ
Are there any debts that children must pay after a parent's death?
Children must only pay their parent’s debts if they are co-signers on the loan or joint account holders, such as on a credit card account.
» MORE: What happens when you stop making credit card payments?
How can I find out if my parents have outstanding debts?
To find out if your parents have outstanding debts, ask the executor for a list of creditors and contact them directly for more details about your parent’s obligations. You can also get a free copy of your parent’s credit report to find a list of debts.
What happens if I co-signed a loan with my parent?
If you co-signed a loan, you will likely be responsible for the remaining debt. An estate lawyer can advise on specific laws for your state and the best steps to resolve the debt.
Is it worth setting up a trust to protect assets from debt?
You could set up an irrevocable trust to protect your assets from debt. However, your assets are no longer yours and instead become property of the trust.
Article sources
ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
- Consumer Financial Protection Bureau, “Does a person's debt go away when they die?” Accessed Jan. 22, 2025.
- Consumer Financial Protection Bureau, “Debts and Deceased Relatives.” Accessed Jan. 22, 2025.
- Consumer Financial Protection Bureau, “Debt collectors that take advantage of surviving spouses and their vulnerabilities.” Accessed Jan. 22, 2025.
- Consumer Financial Protection Bureau, “What information does a debt collector have to give me about a debt they’re trying to collect from me?” Accessed Jan. 22, 2025.
