How to Manage Debts after a Bereavement

The death of someone close to you is bound to have devastating effects on your entire life. During bereavement, many people are affected emotionally, mentally, and financially. If you have been left with debt after a loved one passes away, it is important to take steps to manage this debt in a way that is responsible and sustainable.

It is understandable for you to feel unsure about what happens to a person’s debts or assets when they die. We have provided some guidance below around taking those first steps at managing debts after a bereavement.

What is debt?

Debt is an amount of money that is owed by one person or entity to another. This can be in the form of a loan, a credit card balance, or any other type of financial obligation. When someone takes on debt, they are agreeing to pay back the money that they have borrowed, along with any associated interest or fees.

Debt can be useful in certain situations, as it allows people to borrow money to make purchases or investments that they may not have the cash to pay for upfront. However, if not managed properly, debt can also become a burden, as the borrower may have difficulty making the required payments.

My loved one has left debts behind after they died. What do I do?

First, it is important to understand what debts your loved one has left behind. This may include things like credit card debt, mortgage debt, car loan debt, and personal loan debt. It is important to carefully review all these debts and to understand the terms and conditions associated with them.

Once you have a clear picture of the debts your loved one has left behind, it is important to prioritise them. Some debts, such as mortgage debt and car loan debt, may be secured against assets, which means that the lender has the right to repossess those assets if the debt is not repaid. In these cases, it may be necessary to prioritise these debts and to make sure that they are paid on time.

In some cases, it may be possible to negotiate with creditors to try and reduce the amount of debt that is owed. For example, if your loved one had a credit card with a high interest rate, you may be able to negotiate a lower rate with the credit card company. This can help to reduce the amount of interest that is being charged on the debt, which can make it more manageable. It is also important to consider your own financial situation when managing debt after a bereavement.

If you are not able to manage the debt on your own, you may need to seek help from a financial advisor or a debt counselling service. These professionals can provide you with guidance and support to help you manage your debt in a way that is sustainable and responsible.

When should I get help?

It is important to get help with debts as soon as possible after a bereavement, even if you are not sure how you will be able to manage them. There are a few key reasons why it is important to seek help with your debts after a bereavement:

• To understand if/how this affects your own financial situation

• To prioritise certain debts: Not all debts are created equal, and it is important to prioritise them in order to manage them effectively

• To inform and potentially negotiate with creditors: The creditors should be informed as soon as you feel that you are able to discuss the debts

Debt concerns can add a high amount of stress during such a difficult period of your life. Although it is important to seek help with your debts as soon as possible after a bereavement, you must go at your own pace. If you do not feel like you are able to discuss the matters over the phone, it is possible to communicate with creditors online.

The emotional impact of being in debt

Whether you have to manage a loved one’s debts after they have died, or whether you are managing your own debts, you will likely experience a significant emotional impact. The burden of debt can weigh heavily on individuals and can lead to feelings of hopelessness and despair.

One of the major emotional impacts of being in debt is the sense of financial insecurity it can create. If you are in debt, you may worry about how you will be able to make your monthly payments, or how you will be able to pay off your debts in full. This is extremely normal and is called debt fatigue.

In some cases, the emotional impact of being in debt can be so severe that it leads to mental health problems, such as depression and anxiety. These conditions can make it even more difficult for you to manage their debts, as you may be unable to think clearly about your finances.

How can I get help?

There are a variety of ways that you can seek out help and support.

• IE Hub is a free, online tool that can help you manage your finances. Not only can you budget your own finances, but you can also communicate with creditors in your own time, without long and stressful phone calls.

• Step Change is a debt charity that can provide free and confidential advice whenever you are ready. They will be able to advise you on what your next steps may be in managing yours or your loved one’s debts.

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