What happens to your debt when you pass on?

In the course of assisting over-indebted individuals from all walks of life, our Libertine Consultants representatives are often asked what would happen to their debt if they should pass on. As such, we thought we’d share a concise summary of how debt is handled if the person in whose name it is should die.

In short: there is good news and bad news. Let’s start with the good news.

date: 24/09/2018Author:


Your family will not be held liable for your debt

The first bit of good news is that your family cannot be held liable for your debt, unless they co-signed for it. If you should die with outstanding debt the following procedure will be followed: Your death will be reported to the Master of the High Court by your appointed executor. The news of your death will be posted and circulated throughout your region to give any creditors time to file a claim against your estate. Your executor will locate your estate's assets (properties, vehicles, investments, etc.), which will be liquidated to pay off your debt. Secured loans will take precedence over unsecured loans. If there is anything left over, this will be distributed to your beneficiaries.

Creditors forgive outstanding debt if the liquidation of your estate does not cover it

In the event that there is still an outstanding balance left even after the liquidation of your estate, the remaining amount will be forgiven by your creditors. Your family will not have to pay in on your behalf. Next up, the bad news.


If you don’t have a will things will get complicated for your family

The single most important thing you can do for your family to ease your passing is to make sure that you have a legal will in place. If you should pass on intestate (without a will), the contents of your estate will be handled in accordance with the Intestate Succession Law. This means that you will have no control over what goes to whom and your funds are likely to be tied up in court for years.

Co-signees will be held liable for debt

If your spouse or business partner co-signed for a loan, they will be held liable for the full repayment thereof after your passing. Your assets will be liquidated to pay off the loan, but if there is an amount outstanding, it will fall to your co-signee to service the debt in your absence.

If you have any more questions pertaining to the management of debt after you pass on, feel free to reach out to a Libertine Consultants representative. We offer a range of credit services and debt services and will be happy to answer your questions in this regard.

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