At a Glance

While managing your own finances is almost always recommended, it can be tempting to pass off your debts to someone else who may be able to pay them off faster or easier than you. Just because someone can pay off your debt, however, it’s important to use discretion. There are several things to keep in mind and do to protect both yourself and the person paying off your debt

In this article, you’ll find more information, including:


Expert tip from Thomas Brock: Anyone can pay off your debt, but this can lead to tax complications, credit reporting issues and a strain on personal relationships. I always advise individuals that are considering allowing someone to pay off a debt to communicate openly with the benefactor. If a large sum of money is involved, I also recommend obtaining financial and/or legal advice from a credentialed professional.

Things to consider before someone else pays off your debt

If you’re struggling with debt from a student loan, medical expense, or just a poor purchase made on a credit card, and have a friend or family member who will help, they are able to do so if they choose.

Before asking someone for money or to help you financially, though, try asking for advice first. Start the conversation and be honest about your situation and needs. Be sure to choose the right person, who is someone you trust and also trusts you. Don’t over-negotiate or ask for too much, and instead be flexible and understanding of their situation and willingness to help.

Once you work out a deal, write it down and work out a realistic repayment plan. Finally, be sure to thank them for their help and show your gratitude. Ahead of all of this, though, be sure to consider the following items:

1. Creditor rules

It’s worth noting that not all creditors allow for someone else to pay off another person’s debt. While the majority of creditors don’t really care where the repayment of their funds comes from, it’s important to read the terms of your initial borrowing. Whether a creditor doesn’t accept payment from someone else because they don’t trust the source or for some other reason, they are within their right to refuse payment from someone else if it is not allowed.

2. Loan terms

While a creditor may allow another person to pay off your debt, they might change the terms of that loan or general debt. For example, they may allow the other person to take over your debt, but if that person has a slightly worse credit score then they may change the interest rate on that debt which might make it more expensive for the other person.

3. Tax implications

Depending on where you live, having another person pay off your debt may be considered a gift which might come with certain tax implications. You will need to research the specific tax laws in your area to determine this.

4. Relationship with the payer

The final factor to think about before asking someone to help pay off your debt is how your relationship with that person will be affected. Emotions such as guilt or feelings of indebtedness may start to come out after the fact, and this can have detrimental effects on a relationship. This can be devastating, especially if it’s a close relationship, so evaluate this factor before diving into having them pay off your debt.

How can someone pay off your debt?

With the above caveats to having someone pay off your debt outlined, it’s time to dive into how exactly someone can go about assuming your debt obligations. In general, there are four primary strategies a person can follow:

1. Pay the creditors directly

Arguably the easiest way to get your debt paid off by someone else is to have them contact your creditors directly and make a payment on your account. All a person will need in order to do this is your account number and the phone number for your creditor. They can also choose to mail a check to your creditor and put your information related to your account on the check.

2. Cash gifts

Another easy way to make a payment on someone else’s debt is to have the donor give you the money for the debt as a cash gift. Larger amounts of money may be challenging to handle with cash, so a direct deposit to your bank account can work as well.

3. Debt consolidation

Assuming the person taking over your debt doesn’t want to pay it all off in one fell swoop, they can choose to take over the debt with a debt consolidation loan. This means they take out a loan in the amount of your debt, their creditor pays off your creditor, and then they handle repayment on all that debt with an entirely new interest rate and payment schedule.

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4. Linking their bank account

The final easy solution to having someone else pay off your debt is to just link their bank account to your debt account. This makes the most sense if they can afford the current monthly payments on the debt and don’t want to get a new interest rate.

Will I be taxed if someone pays off my debt?

Whether or not you are taxed when someone else pays off your debt is entirely dependent on how they pay it off. If a person has given you a gift of over $17,000, however, it will need to have some taxes paid. Additionally, if an employer decides to pay off certain types of debt such as student loans it qualifies as taxable income and payroll tax would be applied. For the most part, though, having someone pay off your debt will not require taxes.


If you don’t expect repayment, anything you give to a person or even a third party, such as a credit card company, can be considered a gift by the Internal Revenue Service (IRS). Their definition of “gift” is transferring property or money to someone else without receiving the full value, or anything, in return. You’re able to give up to $15,000 per person each year without paying taxes on that gift. More than that and you’ll have to pay a gift tax. The exception is if you pay off your spouse’s debt, regardless of the total.

Yes, it’s possible for someone else to make payments on your mortgage, but they will require your name and mortgage loan numbers.

If you are looking into how to pay debt collector requests on someone else’s behalf, rest assured knowing it is possible. The individual with the debt will be required to input their SSN, but another person can make a payment on their behalf.

Money that is received as a gift is not taxable on behalf of the person who receives the gift. Paying someone’s mortgage counts as a gift payment. The tax exemption for such a gift is $16,000 meaning that the individual who gives it won’t pay taxes on the first $16,000 given. Whether you are looking at how to pay off collection debt or a mortgage, the tax law remains the same.

When looking at how to pay a collections bill, you may be wondering if the money you provide to someone is considered their income. It is considered gift income, which is untaxable up to $16,000. After this amount, you will be required to pay taxes on what you pay over that $16,000.

Yes, a person can pay off the debt of their family member in two main ways: they can provide them the funds directly which the person can then apply to their account, or they could call your bank directly to pay the debt over the phone.

Yes, one person can almost always pay off another person’s debt assuming the creditor allows for it. Strategies for paying off someone else’s debt include cash gifts, linking your own bank account to their debt account, debt consolidation, and more.