What happens to a loan(s) after death?

Question

What would happen if a person were to die with a car loan and a student loan? The car loan being with a bank and the student through US gov't. Does that liability get transferred to family or is it dropped? Not sure if this is the right sub, but worth a shot.

Answer 1

Actually, neither. As a general matter, when a person dies, the person's debts are not extinguished. They become obligations of the decedent's estate. Satisfaction of the debts will leave less for the heirs (e.g., decedent's family), but family members of a decedent are generally not personally liable for the decedent's debts. The foregoing is academic in nature and intended for the general interest of the audience. It is NOT legal advice or opinion.