economy
Which debts are forgiven when someone dies?
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TL;DR
- Debts generally belong to the borrower and are paid from the deceased's estate.
- Unsecured debts like credit card debt and personal loans without co-signers are often forgiven if the estate has insufficient funds.
- Federal student loans are discharged upon death; some private student loans may also be forgiven.
- Medical debt may go uncollected if the estate has no assets.
- Secured debts may result in deficiency balances if the collateral sale doesn't cover the amount owed.
- Reducing debt during one's lifetime is the most effective way to protect heirs.
- Debt management plans, settlement, consolidation, and bankruptcy are potential debt relief options.