A client's adult daughter once called me in a panic because a collector implied she owed her late father's credit card balance. She didn't. But the fear was real, and it's common, so let's walk through what actually happens to debt when someone dies.
The short version: your estate pays your debts, not your family. Whatever you owned goes into the estate, creditors file claims against it, and they get paid from those assets before heirs receive anything. If the estate runs out of money, remaining unsecured debts generally die with you. Collectors sometimes lean on grieving relatives anyway. Family members with no legal tie to the debt can simply decline.
Now the exceptions, because they matter. Anyone who cosigned a loan owes it outright. Joint account holders keep the full balance. In community property states, a surviving spouse can be responsible for debts from the marriage. And secured debt follows the asset: whoever wants to keep the house keeps making the mortgage payment.
Watch for this: cosigning is the exception that catches families most often. A parent who cosigns a child's loan, or the reverse, has created a debt that survives either death. If you've cosigned anything, that obligation belongs in your life insurance math.
Which brings up the part I find most useful. A life insurance death benefit paid to a named beneficiary usually passes outside the estate entirely, so it goes to your person, not into the creditor line. That only works if the beneficiary form is right, though. Naming your estate, or letting the designation go stale, can pull the money back into the pile. A five-minute beneficiary checkup protects that, and here's how the claim itself gets paid. State rules vary on the details, so a quick conversation with an estate attorney is money well spent for anything complicated.