How To Deal With A Spouse’s Debt When They Die

“Am i responsible for my spouse’s debt after death?”

The death of a spouse is one of the most traumatic and devastating events a person could be faced with, leaving a wide range of affairs to settle for the surviving partner, on top of the deep personal grief and loss. 

In the UK, the average household debt (excluding mortgages) is £13,000. This includes credit card debt, personal loans, and other types of borrowing.

If your spouse has died leaving outstanding debts and liabilities, you may have questions about how to deal with these obligations and if they are your legal responsibility to pay. In this article, we explain how to deal with the spouse’s debt after death, and where to turn to for help.

Shared Mortgages And Joint Loans

If you have a shared mortgage with your late husband, wife, or civil partner, the outstanding balance will become your sole legal responsibility to pay off after his or her death. Most lenders are extremely sensitive to these difficult circumstances and understand that the death of a spouse can place the surviving partner in a financially challenging situation. We recommend contacting them directly as soon as possible to explain your circumstances and discuss your options. 

If your partner had a life insurance policy, this may be sufficient to pay off the outstanding balance of your mortgage, and some lenders may agree to a payment holiday to give you time to grieve and settle the affairs of your late partner.

The same applies to joint bank loans and credit cards that were taken out in both of your names – after the death of your partner, you will still be expected to pay any outstanding balance.

Individual Debt

Under UK law, individual or personal debt, including credit card debt, student loans, car loans, payday loans (short-term loans for small amounts of money) etc, is not inherited, so it is not your responsibility to pay. The debt will be paid off from funds in your spouse’s bank account and from the value of his or her estate. If there is insufficient money in the estate or funds to pay back the debt, the lender cannot look to the surviving spouse for payment. 

Credit Card Debt

If your spouse had an outstanding balance on their credit card, it is important to know that you are not legally obligated to repay the debt from your own personal resources. However, this may not stop the credit card company from trying to contact you to arrange repayment. The best thing to do is to send a formal letter to the credit card company explaining that your spouse has passed away and that he or she will no longer be able to continue repayments – please contact one of our solicitors for more support or information on this matter.

Loans

Personal loans are different from credit card debt because they are often secured against an asset, such as a car or property. This means that if you do not make the payments, the lender can repossess the asset. If your spouse had a personal loan in their name only, however, you are not obliged to continue making the payments, even if the loan was secured against a jointly owned asset. 

Mortgage 

If your spouse had a mortgage in their name only, as with other secured and unsecured loans, you are not required to continue making their mortgage payments. However, if the property in question passes to you in the terms of your partner’s will, the lender will contact you to discuss your settlement options, which may include selling the property, transferring the loan to your name, or finding a new borrower to take over the mortgage payments. 

Book An Appointment With One Of Our Wills, Trusts, And Probate Solicitors

Dealing with the death of a spouse is difficult enough without having to worry about outstanding debt. 

Remember, you are not responsible for repaying the debt unless it is a joint debt or you are a guarantor, and it is not legal for lenders to attempt to pressurise you into making a repayment. 

However, if you are responsible for repaying the debt, you should continue to make payments as normal, or from your late partner’s estate, if possible. If you are having difficulty making payments, you should contact the lender to discuss your options. They may be able to offer you a hardship arrangement that spreads your repayments or lowers your liability by giving you an interest holiday.

To discuss your situation in confidence with one of our experienced team, please click here to book an appointment.

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