What Happens to Debt When a Person Dies?

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After a person dies, their debt becomes the obligation of the state, the spouse or the children. Consider obtaining an insurance policy to pay off debts after death with advice from an investment consultant in this free video on debt.

Part of the Video Series: Personal Finance & Money Management
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Video Transcript

Hi I'm Roger Groh, we here today to talk about what happens to debt when somebody dies. If you've come to me as a banker and I've lent you money to buy your home for instance. And you happen to pass away. Well do you really think that I'm not going to be looking to get my money back? Of course I am. The debt stays in existence and becomes a obligation of the state, which is really the financial obligations of the decease person that lives on, even though that person has passed away. So you're not going to be quite as concerned about paying that debt, certainly your spouse, children and others will be. However, you may not want to leave any of those people with that debt. So you may very well want to add a term insurance policy that will pay off that debt if you were to die early. It's just a way to reduce the pain that your loved ones will feel after you die. I'm Roger Groh, and that's what happens to your debt after you die.

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