Many people wonder “What happens to my debt when I die?” Likewise, some family members worry that they might inherit debt from their parents or spouse. Rest assured, debt, in and of itself, is not inheritable, and a surviving spouse or other family member will not be held responsible for the debt of a person as long as those debts are in the sole name of the person who passed away. However, this does not mean that debt is forgiven upon death either. When a person passes, their debt must be paid by their estate, or at least as much of the debt as can be paid by the estate.

Upon passing, all of a person’s assets become assets of their estate, and all of their debts become debts of their estate. One of the duties of the Executor is to pay the outstanding debts of the estate using estate funds. This must be done before any distributions are made, and distributions can be made only if there are amounts in the estate after the debts are paid.

In New Jersey, there are many different types of debt an individual might have incurred, and a creditor has nine months to file a claim against an estate. The first type of debt is one that is secured by an asset, such as a mortgage or an auto loan; this debt will need to be settled either by the Executor using estate funds or by the estate selling the asset and using the proceeds to pay the outstanding balance. However, if a house or car is specifically bequeathed along with the corresponding mortgage or auto loan, and the beneficiary chooses to accept the item, that beneficiary will have to pay the corresponding debt out of their own funds. Typically, the new owner (beneficiary) of the asset must refinance the loan in their own name.

If a person dies with unpaid federal student loans, the debt is discharged. However, if a person dies with credit card debt, medical debt, or an unsecured personal loan, the Executor can negotiate with the creditor and use estate funds to pay off the agreed portion of the outstanding debt. It is not the responsibility of the Executor to use their own funds to pay off the outstanding debt unless that debt was in the joint names of the Executor and the person who passed.

Identifying and dealing with debts of decedents is often overwhelming to Executors and surviving family members. If you have any questions about debts or any other estate administration matters, please feel free to reach out to the Manes & Weinberg Probate/Estate Administration team, we would be happy to help you.  You can either call us at (973)376-7733 or send an e-mail to