Skip to Main Content

Here’s how to keep your debt from following you to the grave

Wilted rose bouquet
Lyn Pereyra / EyeEm/Getty Images

At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict , this post may contain references to products from our partners. Here’s an explanation for

Debt is a common problem for Americans. In 2021, consumer debt reached nearly $15 trillion, meaning the average consumer has just under $93,000 in debt. Roughly 75% of adults carry a credit card balance each month.

If you have debt, it’s a good idea to come up with a plan to pay it off. Even if it feels like your debt will follow you to your grave, there are steps you can take to start paying it down.

What happens to debt when you die

Few people like to think about it, but everyone will die someday. Rather than leaving your family unprepared for your passing, it’s important to make sure that you have your finances in order so they can take time to grieve rather than stress about money.

What happens to your debt when you die depends on a few things, including where you live, your marital situation, and the specific terms of your debt.

In general, if you’re single then your estate’s funds will go toward repaying your debts. If your estate isn’t sufficient to pay off your debts, your heirs will not inherit your debt unless they cosigned on it. However, your creditors can repossess assets that secure loans like mortgages or car loans.

If you’re married, things get more complicated. If your spouse was a co-signer or co-borrower on your loans, they’re responsible for paying them back. Some states, such as Arizona, California, and Texas, are community property states. In community property states, state law states that a debt incurred by either spouse is automatically a joint debt.

Even in states that aren’t community property states laws might state that spouses are responsible for certain types of debt, like medical debt.

Coming up with a plan to repay your debts and paying them off while you’re alive saves your loved ones from having to deal with your creditors after you pass away. It also gives you more control over the assets you leave behind because your estate won’t have to sell them off to pay back your debts.

How to pay off debt

If you’re trying to get your financial life on track and pay off your debts, there are a few things you can try.

Evaluate your financial situation

A good way to start is to take a realistic look at your current situation.

Mark Struthers, founder of Sona Financial in Chanhassen, Minnesota, advises his clients to “just start off tracking, because oftentimes if they can just start tracking what their debt is, what they’re spending stuff on, that can be a good foundation.”

If you’re behind on any payments, your first priority should also be to catch up before attacking your debt. Struthers describes this step as triage; you need to take care of the emergencies before you can move on to the rest.

Use a debt payment strategy

Paying off debt can be a long-term process, especially if you’ve borrowed a lot of money. You can choose a debt payment strategy based on your goals and what helps you stay motivated to keep paying off your loans.

Avalanche method

The avalanche method focuses on paying down your highest-interest debts first, so you can save on interest payments throughout the lifetimes of your loans. That doesn’t mean you forget about the other debts; just prioritize them in order of highest interest rates.

Mathematically, the avalanche is the method that saves you most in interest over time, but those who prefer small victories or are more visual may opt for the snowball method.

Snowball method

The snowball method focuses on paying off debt in order from smallest to largest totals. After each debt is paid in full, you can roll its monthly payment over into your next highest debt’s monthly payment.

“You’re not focused on the highest-interest debt, you’re focused on the smallest balance so you get that small win,” Struthers says. “It’s motivating.

“I think for most people, the confidence boost of seeing debts disappear is a point in favor of the snowball,” Rossman says. Once you’ve cleared high-interest credit card debt and started tackling other debts with similar interest rates, the snowball method can help. “You whittle down the list and you feel better about it, and you’re more motivated to take on the next,” Rossman adds.

Take on the snowball method only after you’ve paid down your high-interest credit card debts, as they can be most detrimental to your overall financial health.

The snowball method is also a good choice for people who are straining their monthly budget. Paying off a loan eliminates an obligatory monthly payment, which can give you a bit more wiggle room in your budget.

Refinance or consolidate your debt

Another option is to refinance your loans or consolidate them. If you have multiple loans and credit cards, consolidation can turn multiple monthly payments into a single one that’s easier to handle. You might even be able to reduce your monthly payment or the interest rate, saving you money.

Struthers says the only right payoff strategy is the one that works best for you. “It comes down to personality, the type of debt, how much debt, and then the urgency behind the debt.”

Even so-called good debts can turn sour if you don’t have that clear path in place and you end up having to take on higher-interest debts over time to help pay them off.

Don’t discount how helpful extra income can be throughout your debt payment process as well. In addition to side hustles and part-time jobs, look for ways to cut your expenses, whether by comparing utility rates, cutting subscriptions, or better budgeting.

Focus on a long-term strategy for financial growth

Paying off debt is just one part of coming up with a long-term financial plan. While getting out of high-interest credit card debt is important, if you have lower interest debt, like an auto loan or a mortgage, it might be worth carrying that debt to focus on other goals.

Saving for retirement is something that every American should be doing, yet the average American had less than $130,000 in their 401(k) in 2020 and the picture was even more dire for younger Americans.

Even if you have debt with moderate interest rates, saving for retirement is a good idea, especially if your employer offers 401(k) matching contributions.

You should also come up with a plan for how you’ll use the money you’re putting toward debt once you pay it off. The last thing you want is to find yourself overspending again as soon as you pay off your last loan.

Use a debt settlement company

If you’re in an insurmountable amount of debt, you might consider working with a debt settlement company. These businesses negotiate with your creditors on your behalf to help you get out of debt.

These companies can either help you settle your debts for less than you owe or come up with payment plans that you can afford. Just keep in mind that settling your debt this way can have a negative impact on your credit, making it harder to get loans in the future.

Before working with a debt settlement company, make sure to do your research. People in significant debt and looking for a way out are common targets for scammers who prey on desperation. Look for customer reviews and do your due diligence to make sure the debt settlement company you work with is legitimate.

Bottom line

Being in debt can be immensely stressful, and it’s easy to feel like you’ll never be able to pay off your loan. However, with a bit of planning and work, you can come up with a plan to get out of debt and stay out of it.

Written by
Kendall Little
Kendall Little is a personal finance writer who previously covered credit card news and advice at Bankrate. Kendall currently is a staff writer for NextAdvisor. She is originally from metro Atlanta and holds bachelor’s degrees from the University of Georgia in both journalism and film studies. Before joining Bankrate in August 2018, Kendall worked in digital communications throughout various industries, including education, health care and television.
Edited by
Loans Editor, Former Insurance Editor