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What happens to my debts if I die?
This page contains information about debt solutions available in England, Wales and Northern Ireland. Debt advice in Scotland involves similar but different solutions. Before considering an IVA as a debt solution, please make sure you fully understand the risks involved when entering an IVA.
We recently came across this story from broadcaster Danny Baker, who was diagnosed with throat cancer a couple of years ago (he’s now fully recovered) but had no relevant insurance and not enough money saved to cover his bills during his illness (we sometimes hear this from clients calling our Helpline).
Danny was lucky enough to be able to call on his friend and fellow broadcaster Chris Evans, who lent him £30,000 to cover his essential bills at a frightening time in his life.
Our Helpline deals with callers from all over the UK in all different kinds of financial dire straits, sadly including those who are fighting life threatening illnesses. However we’re not all lucky enough to have a friend like Chris Evans to step in at a time of real crisis.
It’s human nature to bury your head in the sand when it comes to creditors. After all, dealing with your health and your family are more important.
We sometimes deal with people with very serious health conditions who are under the impression that once they die any debt they have will be written off.
This isn’t strictly true – if you leave no money or assets then the creditor has little choice but to write off the debt. However, if there’s an estate left behind creditors can make a claim to recover any money left outstanding by the deceased.
What can be even more upsetting to explain is that if you die any joint debts would now need to be repaid in full by the other person (often a partner). Again, we can offer advice and assistance to the family about this issue.
Finally, we know that one of the many misconceptions surrounding debt is that those who find themselves in debt have done so from overspending or living recklessly beyond their means. However, income shocks such as serious illness and bereavement are much more likely to cause problem debt.
If you die or get critically ill while on an IVA
If you’re subject to an individual voluntary arrangement (IVA) it can be quite different. If you pass away the IVA would be terminated and then creditors would claim against any estate.
However, if you develop a terminal illness during an IVA it’s possible that things can be done to ease the situation.
StepChange VA, our award winning IVA provider, has helped clients by using a portion of funds from a critical illness policy to get creditors to agree that an IVA is complete.
And in one case StepChange VA asked creditors to agree to end a client’s IVA early with no further action (when the client had a terminal illness). These scenarios would depend on creditor agreement and the clients own individual circumstances.
Health and family are more important
It’s heart-breaking to find out that you have a serious illness or lose a partner or family member, but this is only made worse by the potential loss of income during this difficult time.
If you’re a client we’ll do all we can to help if you if your health is suffering or have lost someone close. To help cope with this loss of income we make sure clients are claiming all the benefits that they’re entitled to. We have a dedicated Welfare Benefits department that exists for this very purpose.
Your debts are the least of your worries when faced with health problems. Creditors too don’t want people with serious health issues or suffering from a recent bereavement being called by collection departments following the debt collection process. Like us, your creditors will need to be informed if you become seriously ill or have lost someone close to you, but we can help you with this and assist in finding the relevant debt solution to your needs.
If you’re worried about debt due to health issues or death you can get help from us by using our online debt advice service Debt Remedy.