Debt

When somebody dies, their debts are paid out of their estate (money and property left behind). However, in these days where many people in the UK carry huge burdens of debt it may be that selling the estate doesn’t cover all the debt. Alternatively you may now face debt that you cannot service as a single person.

You are only responsible for a debt if the loan or credit agreement was in joint names. If in single names you are not responsible for your partner's debt, however the estate can be used to settle debts.

Dealing with debt can be very stressful, especially at a time when you are dealing with emotional stress. So how do you cope?

  • Don't panic. If you have debts then call or write to your debtors and explain the situation. In the case of bereavement they are usually very helpful.
  • Do expect to have to prove the bereavement. You may be asked to produce a Death Certificate in the case of a joint agreement.
  • If you have life insurance then find the documents and set the wheels in motion. Check to see if the person who has died had any extra mortgage protection or entitlement to a pay out from work (known as death in service).
  • Prioritise your debts. Pay off those with the highest interest first and those that are essential such as mortgage, gas and electricity.
  • Have a thorough and honest examination of all household expenditure - identify where you can save money, for example some utility providers provide discounts if you take all supplies from them. Look at sites such as Money Supermarket for the cheapest provider. Suggested areas for potential savings include food, drink, telephone, gas, electricity, vehicles/transport and leisure.
  • Have a budget each week, make it realistic and stick to it. You may find that our budget planner is helpful.
  • Consider taking only a small amount out of the bank at the beginning of the week and using only that. This allows you to keep a grasp of what you are spending and know exactly where you are financially.
  • You may be entitled to government benefits.

You can find more key information about managing debts here.

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