If the deceased has an outstanding loan which is secured against an asset owned by you, the lender can sell that asset if repayments on the loan stop. While the beneficiaries of the estate (e.g. friends or family members) are not responsible for the debt, the estate may lose the asset if the loan can’t be repaid.
Debts in joint names
If the deceased has a secured or unsecured debt in joint names, then everyone named on the account is responsible for the debt. If one account holder dies, their estate may be used to pay off part of the debt or the joint account holder will be responsible for the whole debt.
If the deceased account holder has no assets in their estate, or not enough to pay off their share of the debt, then the other joint account holder will have to pay the outstanding amount.
Having a credit card with another person as an “authorised user” does not mean that there is a joint debt – one person can have the account and issue the other a secondary card.
A guarantee is a promise to continue repayments if the borrower stops making them. If a friend or family member has guaranteed a loan, the lender can chase that person for the debt after the borrower has died. If the debt is secured, the lender can also sell the asset given as security to repay the debt.
Debts that are unable to be repaid
If the estate doesn’t have enough money to pay all debts, and the debts are unsecured debts in the deceased’s name only, with no guarantor, the debts may not have to be repaid.
The executor will let the lenders know that the debts will not be repaid. The executor is responsible for checking whether there are any assets available to creditors to repay the debts. Other family members do not have to do anything.