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What happens to Florida residents’ debt after they die?

On Behalf of | Sep 13, 2022 | Estate Administration

Death can leave a lot of unanswered questions for Florida families. The process of transferring assets and belongings can be difficult for many, especially as bill collectors come calling.

There’s no easy answer to what happens to debt after someone dies. A lot of it depends on what type of debt it was and the length of the account.

What happens to medical debt?

Medical debt might be the most common kind of debt that’s left behind after a loved one passes, especially if they pass while receiving active medical treatment. Sometimes the surviving spouse will be on the hook for paying the remainder of the medical debt.

Thankfully, if there is no spouse in the picture, the debt can’t usually be passed down to your dependents. Your dependents will only inherit the debt if they cosigned on any loans for medical care.

Car loans and other secured debts

Most secured debt – such as car loans – comes out of the estate after a person passes. If your loved one still had a remaining balance on their car loan, some of the money left in the estate will be used to clear that debt.

This is the same with debts like mortgages or any other loans for property. If a loved one left their house to their dependents but were still making mortgage payments, it will be up to the dependents to either take that debt over or use whatever they can from the estate to settle that debt.

Credit cards and student loans

Credit card companies are barred from going after your surviving family members unless their name was on the account too. The same goes for student loans.

Handling debt can be one of the most confusing parts of estate planning. Careful estate planning with enough money set aside to cover remaining debts can make the process easier though.