Debts after death with no estate UK

When someone in the UK passes away, any outstanding debts in their name are paid for by their estate, (the assets and savings in the deceased’s name).

But what if there's no estate for the outstanding debts to be recovered from?

You're only responsible for debts in someone else’s name if the debt is joint, or if you acted as a guarantor.

Being married doesn't automatically make you responsible for debt in your spouse’s name.

If no estate is present, or the value of the estate is not sufficient to cover the debt, debts will be required to be paid in a set order until the money runs out or the remaining estate can be split between beneficiaries.

Keep reading to find out everything you need to know about what happens to debt when you die in the UK…

As discussed, if your partner passes away you're not automatically liable for their debt.

However, jointly owning a property can lead to complications should your partner pass away with a significant level of debt.

The way in which you own the property will influence this.

Loans and credit card debt are the last forms of debt to be settled upon passing.

As with other forms of debt, the estate will be used to cover any outstanding balances, but mortgages, rent arrears and fuel bills will be settled as a priority.

Only once these have been settled, will any remaining estate be used to cover any credit card or loan debt.

As mentioned, if there's no estate present, credit card and loan debts will be some of the most likely to be written off.

Although, should the loan or credit cards be held jointly, the surviving partner will become responsible for settling the outstanding balances.

Again, you'll not inherit any debts under your parent’s names unless the loan agreement was in your name as well as theirs.

Although, if you were expecting to inherit a significant figure due to their estate, this value may be affected as outstanding debt balances in their name will need to be covered before you receive the remaining amount.

Complications may arrive however if you're living within their property and there's an outstanding amount on your mortgage.

If this is the case and both parents pass, the mortgage costs will need to be covered to prevent the house needing to be sold.

No. Whilst executors are responsible for carrying out the process of ensuring all debts are paid via the estate, they'll not be personally liable for funding the outstanding amounts.

The executor simply acts as a facilitator.

In the UK, an unsecured loan will usually be written off when someone passes away. The exception to this is when there's a particularly large estate available.

Unlike a secured loan, which tends to be significant in value and requires some form of collateral (i.e. a house) should repayment be required, an unsecured loan is accepted purely on your credit history.

Often referred to as a personal loan, it doesn't take into account your assets and savings, but instead on your cash flow from a month to month basis.

Generally speaking, if a personal loan is required, it's likely a significant estate won't be present, and as a result of being one of the last types of debt to be covered by your estate, most unsecured creditors will not chase repayment if you pass away.