If a Muslim dies while indebted, then is it the responsibility of his family to pay his debt after his death? The Prophet, sallallaahu 'alayhi wa sallam, was indebted at the time of his death, his close relative was ‘Ali, may Allaah be pleased with him, so why did he not pay the Prophet's debt?

All perfect praise be to Allah, The Lord of the worlds. I testify that there is none worthy of worship except Allah and that Muhammad is His slave and Messenger.

‘Aa’ishah, may Allah be pleased with her, narrated, “The Prophet died while his shield was mortgaged with a Jew for 30 Saa’ of wheat (a Saa’ equals approximately one and a half kilograms).” [Al-Bukhari and Muslim]

There were different narrations regarding who paid the debt of the Prophet and whether it was Abu Bakr or ‘Ali, may Allah be pleased with them.

Ibn Hajar said, “Ibn At-Tallaa’ mentioned in Al-Aqdhiyah An-Nabawiyyah that Abu Bakr paid the mortgage for the shield after the death of the Prophet . However, Ibn Sa’d reported from Jaabir that Abu Bakr fulfilled the promises of the Prophet whereas ‘Ali settled his debts. On the other hand, Is-haaq ibn Raahawayh reported in his Musnad from Ash-Sha’bi that Abu Bakr paid the mortgage for the shield and gave it to ‘Ali ibn Abi Taalib...”

It should be pointed out that the relatives of the deceased are not obliged to pay his debts from their own money; rather, this is only recommended, unless the deceased had left money, then it is an obligation to pay the debt from the money of the deceased before dividing the inheritance and getting back the mortgaged item, as Allah says (what means): {Allah instructs you concerning your children: for the male, what is equal to the share of two females. But if there are [only] daughters, two or more, for them is two thirds of one's estate. And if there is only one, for her is half. And for one's parents, to each one of them is a sixth of his estate if he left children. But if he had no children and the parents [alone] inherit from him, then for his mother is one third. And if he had brothers [or sisters], for his mother is a sixth, after any bequest he [may have] made or debt. Your parents or your children - you know not which of them are nearest to you in benefit. [These shares are] an obligation [imposed] by Allah. Indeed, Allah is ever Knowing and Wise.} [Quran 4:11]

Ibn Qudaamah said in Al-Mughni, “The guardian of the deceased is not obliged to pay the deceased’s debts from his own money; rather, this should be done from his estate, if any. If the deceased did not leave an estate, then his heir is not required to do anything, but it is desirable that he pays his debts in order to free himself of his liability and recover what he mortgaged...”

Allah knows best.