Episode 61: How to Avoid Mistakes with Debt After Death
Episode 61
Host: Jill Mastroianni
How to Avoid Mistakes with Debt After Death
When someone dies, their bills don’t generally become yours, but the wrong step can make them yours. In this episode, Jill Mastroianni breaks down what really happens to debt after death, when you can walk away, when you can’t, and why the order in which you pay bills matters more than the amount you owe.
Using a real client story, listener Tracy’s question from Virginia, and clear legal examples, Jill explains how fear, grief, and misinformation lead people to pay debts they don’t legally owe, and how to protect yourself instead.
What You’ll Learn in This Episode
1. The general rule: You are not personally responsible for a loved one’s debts, even if you’re the surviving spouse. That doesn’t mean the estate isn’t responsible. It just means creditors usually can’t come after your money.
2. The four exceptions that can make you personally liable. You may be responsible if: (i) You co-signed the debt, (ii) You are a joint account holder (not just an authorized user), (iii) You’re a surviving spouse in a “Doctrine of Necessaries” state, or (iv) You’re a surviving spouse and you live in a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin)
3. Student loans: what dies and what doesn’t. Federal student loans are discharged at death. Private student loans depend on the contract. Private student loan co-signers may be released on the death of the student borrower only if the loan was signed on or after November 20, 2018.
4. Why even “non-probate” accounts can be pulled back. In Virginia, joint and P.O.D. accounts can still be used to pay estate debts if probate assets run out. This means “avoiding probate” does not always mean “protected from creditors.”
5. Who gets paid first when there’s not enough money. Each state sets a strict priority order.
Resources & Links
The Death Readiness Playbook: www.deathreadiness.com/playbook
Code of Virginia § 64.2-528. Order in which debts and demands of decedents to be paid.
Code of Virginia § 6.2-611. Liability of surviving party for debts and other liabilities of decedent's estate.
Code of Virginia § 64.2-309. Family allowance.
Code of Virginia § 64.2-310. Exempt property.
Code of Virginia § 64.2-311. Homestead allowance.
Discharge Due to Death | Federal Student Aid
Economic Growth, Regulatory Relief, and Consumer Protection Act. Public Law 115–174—MAY 24, 2018, 132 STAT. 1296
Connect with Jill:
Website: DeathReadiness.com
Email: jill@deathreadiness.com
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When someone dies, do their debts die too?
Today, I unpack the truth about debt after death: when you can walk away, when you can’t, and why the order in which you pay them matters more than you think.
We’ll cover medical bills, student loans, credit cards, community property states, and the laws that decide who gets paid first.
If these bills feel confusing or overwhelming, this episode will show you what really matters.
Welcome to the Death Readiness Podcast. This is not your dad’s estate planning podcast. I’m Jill Mastroianni, former estate attorney, current realist, and your guide to wills, trusts, probate and the conversations no one wants to have. If your Google search history includes, “Do I need a trust?” “What exactly is probate?” and “Am I supposed to do something with mom’s Will?” you’re in the right place.
When I was practicing law in Nashville, I represented a woman who was administering her father’s estate.
I was doing what I always did—sending notices to creditors so we could start the clock on the statute of limitations. I asked her to make a list of all the bills she’d received so I could send those notices out.
Weeks passed and she didn’t send anything.I followed up, but still, she didn’t send anything.
Finally, I asked if I could stop by her house on my way home from work, just to check in.
The moment I walked in, I understood why I never received that list of bills.
There was a towering stack of unopened mail on an armchair in the living room. She didn’t even know where to begin.
She told me she couldn’t open the envelopes because she was afraid of what she would find. She was afraid she wouldn’t have enough to pay the bills. The unknown had completely paralyzed her.
So I sat next to her on the couch, and we opened the mail together.
I told her our first step was simple: we were just going to send notices to the creditors. That was it. One step. Nothing more.
And then I told her that once a week, I would stop by on my way home from work, and we would open her dad’s mail together. We would figure it out together.
Because when we’re grieving, when we’re scared, even the smallest tasks can feel impossible.Not because we’re incapable, but because the meaning of everything has changed.
Understanding moments like this is what eventually led me to create The Death Readiness Playbook — so your loved ones don’t have to feel that lost and alone in the paperwork.
It helps you document what you have, what you don’t, and what bills you pay, so you can leave behind answers instead of questions.
Check it out at deathreadiness.com/playbook. That’s deathreadiness.com/playbook.
Today’s question comes from Tracy in Virginia. She asked:
Do we have to pay our loved one’s credit card bills after their death?
The answer is: sometimes yes, sometimes no.
We’ll get to the specific Virginia law in a moment. But first, let’s zoom out and talk about the general rule that applies in most states.
You, as the survivor of a deceased loved one, even if you’re the surviving spouse, are generally not personally responsible for their debts.
And when I say personally responsible, I mean that you are not on the hook with your own money.
That does not mean the estate of the deceased individual isn’t responsible. It just means creditors that can’t automatically come after you personally.
There are, however, four important exceptions to the general rule that you are not personally responsible for a deceased loved one’s debts.
If any of these exceptions applies, you can be personally liable.
Exception #1: You are a co-signer with the decedent.
If you co-signed a loan, you are just as legally responsible as the person who died. The debt doesn’t disappear—it simply becomes yours.
Now, I am going to get to an exception to this exception in a little bit—and it has to do with student loans. But for now, let’s continue with the remaining three exceptions.
Exception #2: You are a joint credit card account holder with the decedent.
A joint account holder is a co-owner of the account. That means the credit card company can come after the joint owner for the full balance, even if every charge was made by the person who died.
Being a joint owner is different than being an authorized user.
An authorized user is someone who has permission to use the credit card, but who is not a party to the contract. They can make charges, but are not legally responsible for repayment.
Exception #3: You’re a surviving spouse, and your state law requires you to pay certain debts
In some states, there’s a legal doctrine called the “Doctrine of Necessaries.”
These laws can make a surviving spouse legally responsible for certain essential expenses incurred by their deceased partner.
A “necessary” usually includes things like medical care and hospital bills, basic living expenses like food, shelter, and clothing, and funeral and burial costs.
The idea behind these laws is that spouses have a legal duty to support one another. So if one spouse incurs essential expenses and then dies, the creditor may try to collect the remaining balance from the surviving spouse.
The “doctrine of necessaries” doesn’t apply the same way in every state so the outcome can vary widely depending on where you live.
And here’s something that might surprise you. A prenuptial agreement does not override the Doctrine of Necessaries.
Why? Because the hospital, doctor, or care facility was not a party to that contract, to that prenuptial agreement.
You can’t point to your prenup and say, “We agreed we wouldn’t be responsible for each other’s debts,” and expect the hospital to accept that. The hospital didn’t sign your prenuptial agreement, so it’s not bound by it.
The fourth situation where you may be personally responsible for a deceased spouse’s debts is if you live in a community property state.
In these states, most debts incurred during the marriage are considered debts of the couple, not just the individual who incurred them.
So if your spouse dies, and the debt was created while you were married, you may still be responsible for it, even if the account was only in their name.
So how do you know if this applies to you?
There are nine community property states. Listed alphabetically, they are:
Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.
If you live in one of these states, community property, meaning property acquired during the marriage, may be used to pay your spouse’s debts.
The exact rules vary from state to state, and they can be complicated.
If your spouse has died and you live in one of these states, it’s important to speak with a probate attorney so you understand exactly what you are, and are not, responsible for.
Now, let’s talk about one specific type of debt that comes up all the time: student loan debt
If you have federal student loans through the U.S. Department of Education, the good news is that they are discharged at death.
According to the Federal Student Aid Office, if your loan servicer receives acceptable documentation of your death, such as a death certificate, your federal student loans will be forgiven.
But what about private student loans?
Private student loans are more complicated.
What happens after a borrower dies depends on the specific loan agreement and the lender’s policies.
Some private loans are discharged at death. Others are not.
There is no single law that governs all private student loans.
If there is a surviving co-signer, that person will often still be liable, so it’s critical to read the fine print.
But there is a very important exception to that general rule.
In 2018, Congress passed the Economic Growth, Regulatory Relief, and Consumer Protection Act, which amended the Truth in Lending Act.
This amendment releases co-signers from their obligation when the student borrower dies.
But this protection does not apply to all private loans.
It only applies to private student loan agreements entered into on or after November 20, 2018.
The law was enacted on May 24, 2018, and the statute specifies that the protections apply 180 days later—which is November 20, 2018.
So if the loan was signed before November 20, 2018, the old rules apply.
If it was signed on or after that date, the co-signer may be legally released.
Now let’s bring this back to Tracy’s question and to Virginia law.
What are the specific rules in Virginia?
In Virginia, one of the key statutes is Virginia Code § 6.2-611, titled “Liability of surviving party for debts and other liabilities of decedent’s estate.”
This statute deals with something called a multiple-party account.
Under Virginia law, a multiple-party account means either:
a joint account, or
a P.O.D. (payable-on-death) account.
A joint account is defined as “an account payable on request to one or more […] parties.”
A P.O.D. account is an account payable to one person during their lifetime and, at their death, to one or more named beneficiaries.
Multiple-party accounts matter because Virginia law says that if the assets in the probate estate are insufficient to pay the estate’s debts, including certain statutory allowances, then the portion of a multiple-party account that belonged to the decedent immediately before death can be pulled back to pay those obligations.
In other words, even though joint and P.O.D. accounts otherwise avoid probate, in cases where the debts of the estate and statutory allowances exceed the value of the probate assets, they can still be reached to pay estate debts.
So what counts as a “debt of the estate”?
This can include things like credit card balances, medical bills, unpaid taxes, court costs and attorney’s fees.
The term “statutory allowances” might be new to you. What are “statutory allowances”?
These are amounts that Virginia law sets aside for a surviving spouse and minor children before most creditors get paid.
Virginia has three statutory allowances: the family allowance, the exempt property allowance and the homestead allowance.
The Family Allowance is money paid from the estate to support the surviving spouse and minor children.
It can be:
Up to $30,000 as a lump sum, or
Up to $2,500 per month for one year.
This is in addition to anything left to the spouse under the will.
The Exempt Property Allowance allows the surviving spouse—or the minor children if there is no spouse—to claim up to $25,000 in household furniture, vehicles, furnishings, appliances and personal effects.
This can be taken in addition to the family allowance and anything left under the will.
And lastly, the Homestead Allowance gives the surviving spouse—or the minor children if there is no spouse—$25,000 of the estate.
It is in addition to the family and exempt property allowances, but it replaces whatever the will left to the spouse—unless the will left them less than $25,000.
The reality is that sometimes, there simply isn’t enough money in an estate to pay everything that’s owed.
When that happens, state law decides what to pay first.
Every state has a legal order of priority that controls which expenses must be paid before others. In Virginia, that order is found in Virginia Code § 64.2-528.
Here’s how it works under Virginia law.
Costs and expenses of administration get paid first.
These are the reasonable and necessary expenses to collect, manage, and distribute the estate. That can include: attorney’s fees for probate, inventories, accountings, and creditor issues, executor or personal representative fees, insurance on estate property and utilities for estate real estate.
In other words, these are the cost of keeping the estate going and the assets protected long enough pay debts and make distributions to beneficiaries.
Next, statutory allowances get paid.
These are the family allowance, exempt property allowance, and homestead allowance that we just talked about.
These statutory allowances are protected by law and get paid before distributions are made to creditors of the estate.
After paying the statutory allowances, Virginia gives priority to the first $5,000 of funeral expenses.
Anything above that gets pushed down into the general pool of claims, meaning it may or may not get paid at all, depending on how much money is left over.
Next, debts and taxes with preference under federal law get paid. These can include things like:
Federal income tax liability for the decedent’s year of death and
Prior year income tax balances
Next up are medical and hospital expenses of the last illness but it’s capped at $4,000 per hospital or nursing home. If the decedent still had remaining debts from previous illnesses or medical events, those would be part of the lower priority general pool of claims.
In total, Virginia has nine separate priority categories before you ever reach the final catch-all category of “all other claims.”
If you’re serving as an executor or personal representative, you cannot just start paying bills—even if they seem valid.
Because if you pay a lower-priority claim first, and the estate later runs out of money, you can be personally liable for that overpayment.
How do you even know which claims are valid?
Many states impose a hard deadline for creditors to file claims with the probate court.
Virginia uses a looser system.
The clock keeps running until the personal representative takes certain actions or until the normal statute of limitations for the debt expires.
For example, in Virginia, creditors under written contracts, like credit card agreements, have five years to make a claim unless the estate takes steps to shorten that window.
The laws about who gets paid, who must pay, and in what order vary by state and can be quite technical.
So if you are administering an estate, my strong recommendation is this:
Do not pay any bills—yes, even credit cards—without first checking with your attorney.
When someone you love dies, the paperwork can feel endless. The envelopes keep coming and the phone keeps ringing. Grief is layered with the fear of being taken advantage of or making a mistake you can’t undo.
If there’s one thing I want you to take from today, it’s this:
You are not supposed to know this already.
This system is complicated. You are allowed to slow down, to ask questions, and to refuse to pay anything until you understand your rights.
Debt after death is not just about money. It’s about power, pressure, and timing. It’s about who gets paid first, and who may not get paid at all. And the wrong step, even with the best intentions, can cost you personally.
Where the decedent lived matters because state law shapes everything. So make sure you’re relying on guidance for your specific state, not just general advice.
And if you want a deeper, steadier roadmap, I created The Death Readiness Playbook to help you organize, understand, and take the next right step.
Get your copy at deathreadiness.com/playbook. That’s deathreadiness.com/playbook.
Thank you for joining me for this conversation today.
This is Death Readiness, real, messy and yours to own. I’m Jill Mastroianni and I’m here to help you sort through it, especially when you don’t know where to start.
Hi, I'm April, Jill's daughter. Thanks for listening to The Death Readiness Podcast. While my mom is an attorney, she’s not your attorney. The Death Readiness Podcast is for educational and entertainment purposes only. It does not provide legal advice. For legal guidance tailored to your unique situation, consult with a licensed attorney in your state. To learn more about the services my mom offers, visit DeathReadiness.com.
