4 Types of Debts Discharged upon the Death of the Borrower

When a person dies, their estate receives not only their assets, but their liabilities as well. If the deceased left a will, it will determine the asset distribution. Their debts are first settled before the heirs receive their inheritance.

Your estate planning and bankruptcy attorney in Salt Lake City can help sort out these types of debt:

Secured Debt

If a person leaves behind a home mortgage, the person who ends up owning the home will shoulder the debt. If there is joint ownership, the surviving owner is also responsible. If no one pays the mortgage, the bank will foreclose the home.

Unsecured Debt

An unsecured debt, like a credit card debt, receives attention only if the estate has enough assets to settle it. Without a co-signer, nobody has the obligation to settle the debt. Don’t believe collection agencies who would tell you that as an heir, you must pay the debt from your own pocket. That will only be true if you receive something from the deceased’s estate before debt payments.

Student Loans

A student loan is non-dischargeable in a bankruptcy case, but not when the borrower dies. In some cases, it also applies to the death of the student’s parents.


Tax obligations will not go away upon the death of the taxpayer. What’s worse is they may even increase. Income taxes for the deceased’s last income tax returns must be paid. The estate must pay the taxes on income earned after the person’s death. The heirs must also pay the tax due on the income they inherited.

The assets of the estate may likewise be subject to estate tax based on their value. It is apart from the income tax. Tax matters can get complicated. Thus, it is best to handle it with the help of your lawyer or accountant.

These are the types of debts that may be discharged upon the death of the borrower.


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