– When someone dies, what happens to their direct debits and debts?


When somebody dies, how do the companies and banks know, and what happens to their outstanding debts/payments?

For example, car insurance, direct debits for services, and what happens to outstanding balances on credit cards/loans and car financing?

In: 3

They would be billed as per terms of the agreements. Once the company is made officially aware the charge can be transferred to the persons estate or a family member or friend depending on what the debt is for.

Eventually either a family member or someone appointed to manage the estate sends a message (and provides a copy of the death certificate if necessary) asking to cancel any recurring services that aren’t needed to maintain the estate.

As for debts, loans secured by property (such as a car or home) may see the property subject to foreclosure if there is nobody willing to take on both the property and it’s financial obligations.

For any other debts, the creditors can file in court for a share of remaining assets/funds, but if that’s insufficient they don’t get anything else.

So unless a family member chooses to take over the loans, the loans will all essentially go into default, and creditors get first dibs on your assets to make themselves whole. If you had a car loan, they’re gonna repossess that car. If you had a mortgage, they’re probably foreclosing on the home. If you had money in a bank account, they’re gonna take that.

If they take it all and there’s still outstanding debt, then they’re just shit out of luck, they eat the loss. Your surviving family members never inherit your debt unless they themselves were cosigners to the debt, or they choose to take over the debt, like if they lived in your house and they want to keep living in it. The flip side is that any inheritance you try to leave them gets eaten into by those creditors first.

(unless you bury a suitcase full of cash in the backyard and don’t tell anyone about it except them 😉)

It’s up to the executor of their estate to cancel/close accounts, deal with cars, mortgages, etc. Any debts are paid from the estate before remaining assets are distributed to heirs. Some loans can be assumed if desired, ie. a spouse keeping house/mortgage or a kid taking over car loan. Many accounts/contracts can be cancelled w/ proof of death, unused portions of things like car insurance would be refunded on pro-rated amount.

> direct debits for services

I think your survivor/executor will tell your bank, which will freeze your account. So any direct-debit attempts after that will fail. The services which tried to do those debits will send email or call, then cancel your service after a while.