The situation of “where does your debt go when you die?” is based on in which state you reside. Much depends on whose name is attached to the debt, where you live, and the type of debt you have. Home mortgages, car loans, medical bills, student loans, are considered secured debts. Generally, the executor of your estate will attempt to sell whatever collateral you have and will pay off your creditors as much as possible. Everything else typically gets written off as a loss. The heirs who are left behind will not be responsible for making up for the rest of the payments. That is of course, if no one co-signed for those loans or agreed to act as a guarantor.
If someone co-signed, then the co-signer will be responsible for any remaining balance after the original borrower dies. This also includes adult children who co-sign with their parents or promise to cover medical or housing bills if their parents pass away. When you co-sign for something, you are making a commitment to pay off that loan on the debtors behalf. This also applies with “joint” credit cards between a husband and wife. If your assets (things you own) are greater than your liabilities (obligation, debt that you are legally responsible for) then the debt gets deducted from your estate and your heirs get what is left over. The executor of your estate will use savings to pay off debts before distributing any beneficiaries (legal recipient of money) in your will. If you don’t have savings, then the executor may have to sell their cars, stocks, home, and any other valuable assets to make up the difference.